We used the Submillimeter Array (SMA) to image 860 micron continuum and CO(3-2) line emission in the ultraluminous merging galaxy Arp 220, achieving a resolution of 0.23 (80 pc) for the continuum and 0.33 (120 pc) for the line. The CO emission peaks around the two merger nuclei with a velocity signature of gas rotation around each nucleus, and is also detected in a kpc-size disk encompassing the binary nucleus. The dust continuum, in contrast, is mostly from the two nuclei. The beam-averaged brightness temperature of both line and continuum emission exceeds 50 K at and around the nuclei, revealing the presence of warm molecular gas and dust. The dust emission morphologically agrees with the distribution of radio supernova features in the east nucleus, as expected when a starburst heats the nucleus. In the brighter west nucleus, however, the submillimeter dust emission is more compact than the supernova distribution. The 860 micron core, after deconvolution, has a size of 50-80 pc, consistent with recent 1.3 mm observations, and a peak brightness temperature of (0.9-1.6)x10^2 K. Its bolometric luminosity is at least 2x10^{11} Lsun and could be ~10^{12} Lsun depending on source structure and 860 micron opacity, which we estimate to be of the order of tau_{860} ~ 1 (i.e., N_{H_2} ~ 10^{25} cm^{-2}). The starbursting west nuclear disk must have in its center a dust enshrouded AGN or a very young starburst equivalent to hundreds of super star clusters. Further spatial mapping of bolometric luminosity through submillimeter imaging is a promising way to identify the heavily obscured heating sources in Arp 220 and other luminous infrared galaxies.