Microsoft recently announced a set of policies that will govern the use of the Windows Phone 7 Marketplace.
A clause in the Microsoft Marketplace Guidelines bans all forms of adult content and places many other restrictions.
The explicit language forbidding explicit content:
Clause 3.6 of the Windows Phone Application Certification Requirements is quite explicit in this regard!
Its a great move especially in light of the backlash that hit Apple for retroactively banishing adult content from the Apple App Store!