I ran into a problem while playing with the Windows Phone 7 CTP the other day. I was trying to use the Google data services via the WebClient object. It was throwing exceptions no matter what I did. I noticed it threw exceptions on ANY Google-hosted URI.

Long story short: disable Hamachi or any other potential virtual network adapters. VMWare seems to not interfere but Hamachi enjoys taking over connections sometimes and will hijack your phone emulator.

You can view the details of my adventure right over yonder.