Applications in an unofficial Android market are infected by a trojan. Geinimi, as the malicious software is called, sends through private data of the owner, and destroys files.
Geinimi is not the first malware for Geinimi for Android, but it is one of the smartest until now. In the unofficial market where Geinimi surfaced, it was attached to well-known apps. As soon as the users gives the well-known apps access to his phone, Geinimi takes control.
The virus hasn't been seen in the official Android Market. It thus is recommended to get your apps only through the official channels, and leave the hacked apps to the Chinese pseudo-Market. Often, these are apps that cost some money in the Android Market, but are delivered for free by the Chinese. It's better to take your creditcard and pay, and prevent getting a virus on your phone.
Source: Ubergizmo.com