Xbox LIVE games get priority over non-LIVE games
On Windows Phone 7 there are two types of games: Xbox LIVE supported and non-LIVE supported. The former requires more time, money and skills for getting approval and is typical reserved for the "bigger" game studios who can get access to Microsoft's LIVE network (higher standard); the latter anyone can write games for and sell/distribute through the Marketplace.
Therefore, it shouldn't come as a surprise that Xbox LIVE games, the ones that will be of high quality and leverage the full feature-set of WP7, will get listing priority on your device.
This is according Michel Klucher (Lead Program Manger XNA Development Platform at Microsoft), who on his blog gave some details on this issue noting:
Games that do not use Xbox LIVE will be listed right below the Xbox LIVE enabled titles in your collection. All games can be pinned to the start menu just like any other content in Windows Phone 7.
While not a big deal, it seems this would push developers to go for the LIVE option if possible though it may make a few developers feel a little lower on the totem poll if they don't have the deep pockets, like the studios.