I am new to windows phone development. I have an issue regarding screen size variation and I successfully handle the UI according to resolution but problem is that I don't have any idea how to change the size of text for different resolutions, use different images for different resolution etc.
As in Android we have different asset folders. We just put our data in folders and it will use best option automatically according to the screen size . I did a lot of Googling but did not find a suitable solution for it. Any idea how I can achieve this?
You shouldn't pay attention to screen sizes at all, everything is scaled up automatically and applications look good on smaller and larger screens.
If you want to customize the design for your screen depending on the screen size, DPI or something else, take a look at the proposed solution here: http://developer.nokia.com/community/wiki/Advanced_Techniques_for_Big_UI.