XNA 3.1 doesn't support VB through VS.NET, but you logically, you should be able to use VB for XNA in some fasion, considering it all goes to CLR anyways.
This post is retarded though. WM6.5 had already had access to .NET CF which is alot more complex than the .NET Framework they are exposing to WM7. Where WM7 wins is with Silverlight and XNA. But then again, even both of those frameworks rely on exactly what pieces of the .NET Framework they make available.
If WM7 programming is anything like the Zune HD, expect pure failure. Zune HD SDK is nothing but an embarssment to Microsoft and developers who even want to code with it. I can't imagine Microsoft would make a similar move with WM7, but if they do, Android and iPhone, hell even Palm will have a lead.
Only time can tell, and that time is in a few day. The Beta SDK will be released to MIX Attendees, TAP Members and MSDN Subscribers come monday/tuesday. Expect next week to be a huge week in the development and potential for success of WM7.