A new collection of malicious Android apps was available over the Memorial Day weekend from the official Android Market app store. As many as 120,000 Android devices were compromised from the roughly 25 malicious apps before Google identified and pulled them.
Because of the more open nature of Android, and the availability of alternative app stores, it is easier for malware developers to sneak malicious apps into the Android ecosystem than say the Apple App Store which is heavily policed. Still, users expect a higher standard from the official Google Android Market, and should feel safe to download apps directly from Google without fear of infection or compromise.
A middle ground for Android users might be to rely on the Amazon Androidapp store. Amazon sits somewhere between the permissive openness of Google, and the draconian walled garden of Apple to deliver apps that have at least been vetted to some extent to verify their authenticity.