Watch out for the code you place in your sub New() of the ObservableCollection – it can cause the WPF designer problems as the designer will attempt to execute the constructor during design time.  If you’re trying to populate the collection from a file based database then the connection string, in some situations, VS 2008 will look in the wrong place for the database.  It appears that using the |Data Directory| prefix for the database causes VS 2008 (RTM) to look in the working directory of VS – rather than the project directory.

Symptoms of this kind of problem are VS reporting:

“Could not create an instance of type ‘abc’. …Window1.xaml 8 3″ and your XAML reference will be squiggily underlined.
A solution to this problem is wraping the constructor of the object implementing the ObservableCollection in a try/catch and swallowing the error (suggested only during the development cycle) or by detecting if you’re in designtime.

A simple way to detect if you’re in designtime with WPF is:

If DesignerProperties.GetIsInDesignMode(Application.Current.MainWindow) Then
  Add(New contact("DesignTime", "Detected"))
Else
  Try
    oContactsTA.Fill(oContacts)
    For Each thisRow In oContacts
      Add(New contact(thisRow))
    Next
  Catch ex As Exception
    Add(New contact("DesignTime", "NotDetected"))
  End Try
End If