There is very little information yet for mobile developer about the Android SDK . I see 3 possible options:
Option 1) it comes with a native open source JVM. This is the Blackberry approach and the best scenario. It will enable running existing J2ME applications (thousands exist today) and Google will provide more powerfull APIs for their integrationg with their application suite, like GMail, Google Maps and YouTube. GPS APIs would be great too. They will also provide a custom Java based UI toolkit to make applications consistent with the phone UI. IDEs will be Netbeans and Eclipse. The low level access to the underlying Linux OS would be hidden from the developer.
Option 2) The JVM is not part of Android, but available as a addon. This is Palm approach (IBM provides the JVM for Treos). In this case, Esmertec will likely provide a non open source JVM to run J2ME apps to each phone vendor. This is OK but not very good, as the JVM may or may not be present and they will be no integration with existing app or UI toolkit. Developer will have to code all apps running on Android with C or C++ APIs using Eclipse. the SDK will be very similar to the now defund Palm Foleo or the Nokia Linux Maemo platform.
OR ... all 3 options ? Anyway we will know in 1 week time.