Windows Phone development is not supported in VS 11. The Windows Phone development team released an expression saying they were working on a solution to the problem, but for now, Win7 / VS2010 should be used to develop WP7.
There were some hacks to make the emulator work, but I would recommend staying away from them, as some users have encountered Windows crashes.
If you are running Windows 8, you can still deploy to your phone and debug your code on the phone. If you are using Windows 7, use VS 2010 and everything should work.
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