Commented Issue: nuget installing packages to /net40 folder instead of /sl4 folder for default Windows Phone 7 XNA template [2276]

What could be calling nuget to install packages such as JSON.NET to /net40 folder like the following?

{project folder}\packages\Newtonsoft.Json.4.5.6\lib\net40\Newtonsoft.Json.dll

This is causing some of my libraries to break? Is there anyway to make it install to the Silverlight\v4.0\ folder?
Comments: For my education, can you answer this question: In terms of capabilities, is XNA project equivalent to Silverlight 4 project or a Windows Phone 7.1 one? I'm seeing conflicting infos in this bug.