I have similar concerns around supporting smaller screens once they are available. When I asked Microsoft about it I got this response:
Minimize setting heights and widths
directly. Use alignment, grids,
stackpanel, etc. to layout the UI. As
a test, you can create a desktop
Silverlight version / mock of the
project and test it in both
resolutions.
When I asked Brandon Watson last week he told me not to worry about it as they were working on some clever ways to handle this.
I know with XNA that there is scaling support built in, so in theory that makes handling different screen sizes in XNA easier but still leaves the issue of touch target sizes and the ratio differences in the 2 screen sizes. - I don't find letterboxing to be a good look ;)
With Silverlight the problems are potentially more complex as the following needs to be accounted for:
Screen dimension ratio issues
Making large text smaller so it
doesn't take up a disproportionate
amount of screen space.
Not making smaller text smaller as it
may become unreadable.
Ensuring that controls which support
gestures are still large enough to
recognise the gesture.
Ensuring that when neighbouring
touchable controls are made smaller
they still maintain sufficiently
large touch targets that people can
be confident about what they are
touching.
Making large images smaller so they
aren't larger than the available
space.
Making sure that images aren't
distorted when resized.
and many more...
All that said, we'll just have to wait and see what Microsoft come up with and then adjust our apps accordingly.