Current features and specifications:

Handset layouts: The platform is adaptable to larger, VGA, 2D graphics library, 3D graphics library based on OpenGL ES 1.0 specifications, and traditional smartphone layouts.
Storage: The Database Software SQLite is used for data storage purposes
Connectivity: Android™ supports connectivity technologies including GSM/EDGE, CDMA, EV-DO, UMTS, Bluetooth, and Wi-Fi.
Messaging: SMS and MMS are available forms of messaging including threaded text messaging.
Web browser: The web browser available in Android is based on the open-source WebKit application framework.
Java support: Software written in Java can be compiled to be executed in the Dalvik virtual machine, which is a specialized VM implementation designed for mobile device use, although not technically a standard Java Virtual Machine.
Media support: Android™ supports the following audio/video/still media formats: H.263, H.264 (in 3GP or MP4 container), MPEG-4 SP, AMR, AMR-WB (in 3GP container), AAC, HE-AAC (in MP4 or 3GP container), MP3, MIDI, OGG Vorbis, WAV, JPEG, PNG, GIF, BMP.
Additional hardware support: Android can utilize video/still cameras, touchscreens, GPS, accelerometers, magnetometers, accelerated 2D bitblits (with hardware orientation,scaling,pixel format conversion) and accelerated 3D graphics.
Development environment: Includes a device emulator, tools for debugging, memory and performance profiling, a plugin for the Eclipse IDE.
Market: Like many phone-based application stores, the Android Market is a catalog of applications that can be downloaded and installed to target hardware over-the-air, without the use of a PC. Originally only freeware applications were supported. Paid-for apps have been available on the Android Market in the United States since 19 February 2009. The Android Market has been expanding rapidly and after a year of availability, it currently offers over 10,000 applications for download.
Multi-touch: Android™ has native support for multi-touch which is available in newer handsets such as the HTC Hero. The feature was initially disabled at the kernel level (possibly to avoid infringing Apple patents on touch-screen technology).