Well, right now there is no third part tool for capturing screenshots on Windows Phone 7; nor is this feature expected to come soon. Till then, you might want to check out these 3 posts!
Windows Phone 7 Screen Capture
I’ve done a fair amount of Windows Phone 7 screen capture over the last few weeks so I thought it might be worth sharing my approach both for video and stills. In particular, when you submit your application to MarketPlace you must include a screenshot in PNG format with dimensions 480×800 pixels. The Windows Phone 7 Application Certification Requirements document states:
For each application, you must provide at least one or up to a maximum of eight screenshots. The users see this screenshot in the details page of the catalog before they make a purchase. The screenshot should be a direct capture of the phone screen or emulator. Graphically- enhanced screenshots are not allowed.
RedBit Screen Capture
I decided to create a quick sample app that captures the screen on both platforms to compare the code. The sample app basically just places the captured screen inside a PictureBox control (NETCF 3.5) or Image control (Silverlight for WP7). The outer PictureBox/Image control just displays some standard images that come with Windows 7.
Visit blog.markarteaga.com for more!
WP7 Screenshot Tool
As an iPhone developer I was a big fan of the iPhone Simulator Cropper that a company called Curious Times had developed. This was one tool that I truly missed when I started working on a version of our iPhone app Cardinal for Windows Phone 7.
Thanks Vikram, MVP, for the heads up!
Also see this tool.