R – What type of service should I use for Silverlight 2 data

From the silverlight perspective, WCF is heavily constrained anyway, so most of the usual benefits of WCF don't apply. However, it is still a fairly nice, consistent programming model.

WCF is primarily a SOAP stack, so it is very good at presenting data as rigid operations. ADO.NET Data Services is a REST stack, and allows very expressive queries to be performed dynamically over the wire.

I don't know how it is in Silverlight, but a regular ADO.NET Data Services proxy (the bit on your client app) has very rich support for both query and data changes back to the server. Note that applying changes requires either a: Entity Framework, or b: lots of work. But you should get query and update very cheaply with this approach.

With WCF, you get a much more controlled stack, so you will need to code all the distinct operations you want to be able to do. But this also means you have a known attack surface etc; it is much harder to exploit a locked down API like a fixed SOAP endpoint.

Re regular web-services (pre-WCF): only go down that route if you want to support very specific legacy callers.

What's likely happening is that SignalData is indirectly changing the subscribers dictionary under the hood during the loop and leading to that message. You can verify this by changing

foreach(Subscriber s in subscribers.Values)

To

foreach(Subscriber s in subscribers.Values.ToList())

If I'm right, the problem will disappear.

Calling subscribers.Values.ToList() copies the values of subscribers.Values to a separate list at the start of the foreach. Nothing else has access to this list (it doesn't even have a variable name!), so nothing can modify it inside the loop.