A subgroup of the Windows Phone 7/Silverlight team, headed by Jeff Wilcox, just released an extension for Visual Studio 2010 that takes the pain out of debugging XAML databinding expressions.
The extension, which Microsoft marketing has awkwardly dubbed the Productivity, Refactoring And Notification Konnector, allows you to set breakpoints in your XAML and see what values are being applied at runtime.
Using the extension is simple. Just set a breakpoint in your XAML page like you would in C#. As you can see, Visual Studio hits the breakpoint, and you can explore the bound properties or collection.
The Productivity, Refactoring And Notification Konnector add-in was released 4/1/2011.