If you are developing a Windows Phone 7 application that uses Isolated Storage you may notice while using Visual Studio that your storage files get “nuked” or deleted at random times. Well like me you probably realized that it isn’t random but weren’t able to identify the pattern. While exchanging emails with Nick Randolph from down under he suggested that it was when you Rebuild, rather than Build, it will nuke your local storage files. Thirty seconds later I was able to confirm this and life is grand and I can save that minute or so that it takes to restore my settings. =D
UPDATED: from Reddy Duggempudi of Microsoft:
Clean build (rebuild or clean/build) will reinstall the app which in turn will remove all the “old app” artifacts such as Isolated storage.