An update (7.1.1) to the current Windows Phone SDK (7.1) has just been released. With the update, you can now develop Windows Phone apps and games using the emulator on machines running Windows 8 Consumer Preview. Also, you can develop apps that work well on the new 256 MB devices. Prior to the update, only 512-MB version of Windows Phone Emulator was supported.
Because this release is an update, Windows Phone SDK 7.1 must be installed on your computer before you can install Windows Phone SDK 7.1.1. You can install the update on all supported Windows operating systems, including Windows 8 Consumer Preview. Note: There are a few known issues when you install the Windows Phone SDK 7.1 on Windows 8.
Also, there are two caveats running the WPSDK 7.1.1 on your Windows 8 machine that you should be aware:
Check out more detail about the update at Windows Phone’s team blog post here.
If you have Microsoft Visual Web Developer 2010 Express and Microsoft Visual Studio 11 Express (beta) for Windows 8 installed, you will need to install Microsoft Visual Studio 2010 Express for Windows Phone, which is available for download here. Also, make sure that you download and install Visual Studio 2010 Service Pack 1. Then, install Windows Phone SDK 7.1.1. If you missed any step, you can go back and reinstall/repair the missing component and continue. By default, these three applications are installed at the following locations respectively, and they have different application icons.