If you are using the Windows Phone Toolkit context menu, you should be able to get the data you need from the sender object, e.g.
var selected = sender as MenuItem;
Pass the file path to the DeleteFile method to delete a file. You should really check if the file exists first and dispose of the isoFile object when finished with it:
using (var isofile = IsolatedStorageFile.GetUserStoreForApplication())
{
if (isofile.FileExists("foo.txt"))
{
isofile.DeleteFile("foo.txt");
}
}