For the first time I find my Mac very useful as the building applications can resize JPEGs very simple (besides my photo processing work in Lightroom).
Instead of a free app, I did a trial mode for my app so that...
people can try it out before buying it (it's really only $1.09 Cdn). If you are planning to do a trial mode for your application, here's a very useful link as to how you can code and test in trial mode (on emulator and on your device)
If you don't have a wp7 phone, i would advise to get one for testing. Running the app in the emulator is a little bit different (duh!). When I ran my app in the emulator, I debugged and fixed all the problems. However, when I finally put it on my phone to test, some more bugs came out. It's just make sense to be able to test on an actual device before submitting your app.
Now onto my next app!