In this post, Tim Heuer discusses how to simulate geo location in Silverlight WP7 emulator.
In case you haven’t figured it out: Location services (aka, GPS) is not emulated in the developer tools CTP. As you might expect, this makes it difficult to play around with location-based applications.
The API in Windows Phone 7 revolves around the GeoCoordinateWatcher class. This class is what you would initialize to start listening for events.