If you are trying to create a WP7 (or any silverlight project for that matter) and you are trying to access a WCF web service you may receive the following error when you try to create an instance of the WCF service.

Cannot find 'ServiceReferences.ClientConfig' in the .xap application package. This file is used to configure client proxies for web services, and allows the application to locate the services it needs. Either include this file in the application package, or modify your code to use a client proxy constructor that specifies the service address and binding explicitly. Please see inner exception for details.

In my project I saw this because my WCF service references were NOT in the UI project, they were in a common/domain project.  Because of this the ServiceReferences.ClientConfig file was not being put in to the .xap package.  To solve this you simply need add a reference of the ServiceREferences.ClientConfig file inside your UI project.  Recompile and the problem goes away.

Hope this helps.

Till next time,