This is my first Windows Phone, but I have used an Ipaq for years to act as my PDA. The big thing I miss is being able to drop the Ipaq into a cradle and let ActiveSync take care of keeping the iPaq in sync with Outlook. This is not possible with WP7 if you do not have Exchange. First off, there is no convenient cradle for the WP7. WP7 will keep in sync with a Live Account, but you have to manually copy from your Outlook account to your Live Account and vice versa.
Though Outlook allows you to merge calendars, there does not appear to be a similar feature for merging contacts. So it is possible to move most of my calendar activities to the Live account, but keeping the contact lists in sync is a pain. I have different requirements for contacts on the phone versus in Outlook. Most the Outlook contacts are email addresses rather than phone numbers. It would be useful if a contact could be marked in Outlook to limit the selection. The keyboard on the laptop/desktop is easier to use than the one on the WP7, so I prefer maintaining things in Outlook.
So Microsoft, if you are listening, seriously consider providing a means of syncing between WP7 and Outlook by means of the USB connections. (MS, you did miss the boat by not being more specific about the location of the USB connector. The location of the USB connector on my LG phone makes it very unlikely that anyone can make a cradle for the phone. )
John Marshall… Visio MVP Visio.MVPs.org
john Visio MVP 
HERE! HERE! I COMPLETELY agree with you! I replaced my paper-based DayTimer with my WP7, and like you, I’m encountering hurdles. My USB plug is on the top, and again, very UNLIKELY there’ll be docking station for our phones.
re syncing with Outlook
I’m very confused by Microsoft’s decision to NOT synch natively with Outlook. MS ALWAYS toughts it’s a consumer device, but when was the last time you heard/saw a CONSUMER running their OWN Exchange server? (I used to but it’s too expensive). MS then claims, oh it’s easy with Live. Uh…..hhhmmm NO! Yes, you CAN run a Live/Hotmail syncing program, BUT it’s still syncing with Hotmail NOT the phone. And that doesn’t help GMail people (like me).
I have LOTS of hiccups with MS’ syncing strategy, but it’s a 1.uh.oh right now. I’m HOPING MS learns and helps us out.
PS Have you tried the hotmail/Live synching program to sync contacts? Ya, the export/import dance is crappy!