Good game developers are able to create games regardless of the quality of the tools. Its part of the fun to create impressive games with limited resources and tools.
Other than marketing the fact that Microsoft also created a successful game console and xbox live, I don't think Microsoft has any advantage here. Xbox live could be a key differentiator but only after a significant market share has been gained. I don't think people will buy a WP7 phone for Xbox live. Currently iOS offers the best games.
If you want to develop a game on WP7, you HAVE to use XNA. All games in the WP7 app store had to be built with it.
Also, WP7 has no C++ support. John Carmack griped about this on Twitter.
However I suspect that some of the titles from companies such as EA or Gameloft are still written in C++ even though it is not supported officially by Microsoft. It is highly likely that they have some kind of early access to native code compilation for the platform.