Gizmodo was able to get a direct answer on whether or not there would be multitasking on Windows Phone 7. To be fair, all of the apps that are integrated into the OS (which include multiple mail account, music, Facebook, photos, etc) are all running live and getting updated from the cloud. The real question comes as we add new apps. Joe Belfiore, director of Windows Phone, said this:
The core operating system is a modern multitasking operating system. If you play music for example, the music will play back as you navigate around the experience…if you’re using email, we have great support for push email and that happens in the background.
For third party applications—we’ll get into a lot more detail on this in MIX—but we have a few ways we’re going to make sure that third parties can bring their value to the user even when the app is not running. Live tiles are an example. Data feeds in the hubs are another example for some apps.
So it sounds like the app doesn’t run fully in the background but it will be able to continue to be updated and have some features continue to be alive even though the app is minimized. Of course, there are pro and cons to multitasking, so their goal is to give you a full experience without hogging up memory. We’ll have to see how this really plays out.