The DotNetZip Codeplex project at http://dotnetzip.codeplex.com/ looks to be an effective means of programmatically zipping and unzipping files.
The source is also available. It is a VS2008 solution that requires "Windows Mobile Standard v6 SDK (for CF version)"
If you like me would like a VS2010 upgrade, please leave a note at http://dotnetzip.codeplex.com/workitem/12804