Is there a Java API for selling virtual goods in an Android application? If not, is there one in the works, and can anyone recommend another API (eg: Paypal) that integrates well into Android apps for such a purpose?

I'm not sure what you mean by "virtual good", but you should check the Android Market place distribution agreement.

http://www.android.com/us/developer-dis ... ement.html

I'm not an attorney, but there are a few things to consider. One line that stands out:

4.5 Non-Compete. You may not use the Market to distribute or make available any Product whose primary purpose is to facilitate the distribution of Products outside of the Market.

Jeff