I've just noticed this within the Windows Mobile 6 SDK Refresh.

Previously if you're using the device emulator and wanted to use the device emulator to test the camera functionality you just couldn't.

It seems to be that this has now been fixed, so  this works great.

CameraCaptureDialog cam = new CameraCaptureDialog();
cam.Mode = CameraCaptureMode.Still;
cam.StillQuality = CameraCaptureStillQuality.Low;
cam.Title = "A Pic";
DialogResult dr = cam.ShowDialog();

You can a test image when using the emulator.

Another nail in the coffin for me getting a sexy device with built in camera