Yes, a v1.0 WinMo client will not be able to sync with a OData endpoint service.
However, with a v4 service, any client with local storage can sync with the service - the client doesn't need the Sync Framework installed on it, the service runs they sync algorithms on behalf of the client. With the CTP we have also release silverlight
client components that run on Windows Phone 7, and a sample that shows how you would write a client on a Windows Mobile device.