In both SilverLight 2.0 Beta 1 and Beta 2, I've experienced the situation where my break points are not being hit, while debugging my application in Visual Studio 2008. It took a few attempts at figuring out why this was happening, but the answer was to clear the browser cache. I have not determined exactly what causes the browser to cache the SilverLight application. It appears to happen only intermittently for me, with a need to clear the cache a half dozen times a day.
Notice that your break points will have a question mark on them, when the browser is running the cached version. Additionally, of course, any recent changes you made to the application won't be reflected, when running the cached version, despite a browser refresh (F5). You must go into the browser (IE6) options and clear the cache, then refresh.