Kik is a popular, cross platform SMS replacement which has recently come to Windows Phone 7.
The software unfortunately had one significant security hole â€“ because it did not encrypt conversations any slightly competent hacker could eavesdrop on your conversation if they were on the same network. This was an issue Kik had already solved on their Android and iPhone app by encrypting conversations.
Unfortunately the Windows Phone 7 client shipped without this protection, but Kik has now released a version 1.1 update which addresses this issue, and adds some other bug fixes.
Kik provides group messaging, picture sharing, is free and can be downloaded from Marketplace here.