Caveat - I use WPF not Silverlight.
By the VM instantiating the V (which is the way I do it) the view is independent and can be used independently of the VM (e.g. in a designer)
Personally, I am veering toward a MVVMC (model, View, ViewModel, Controller) where I have a controlling class which instantiates ViewModels and Views and 'joins them'. The C also then handles getting data (and caching it, etc.) and any communicating across VM and Vs (e.g if a V is instantiated, routes a command to its VM to perform some action, the VM will probably ask the C to perform the action on its behalf; the C can then raise appropriate events which other VMs can handle
If (whether using a controller or not) I need a VM to talk to another VM, it is harder to do so if the V instantiates a VM - because no I have to expose the VM in the V (or at least make some interface available so the 2nd VM can talk to the 1st).