A Windows Phone 7 developer called Vangos Pterneas has created a facial recognition system for WP7 based devices.
The new system uses the Facelight libraries that are open source.
Using Facelight is a piece of cake. You only need two XAML image controls placed in the same position. The upper one (named ImgResult) will contain a red ellipse specifying the recognized face and the other one (named ImgOverlay) will contain the original bitmap source.
The software is capable of recognising skin on a picture although it can only detect one face at the moment in a scene.
Although not fully available just yet, you can follow along with the development over at this blog.
The system also uses Sliverlight which also helped with the development. In porting the code over, almost no changes were made to the code.