Google is far more lenient than Apple regarding app development. But such openness comes at a cost. Security firm Lookout recently discovered that over 80 Android wallpaper apps collected users' personal data and sent it to a server in China.
When you install an app from the Market, a screen will tell you what the app will access. That may include your location, network communication, personal info, storage, phone calls, and your accounts. Simply read the contents of the access list screen carefully before installing any application.
For apps already installed on your Android device, you can review the access of your installed apps on the Manage Applications screen. On most Android devices, simply pull up the menu, tap Settings, and select Applications. Select an app from the list then scroll down to see the Permissions section. Anything that appears out-of-the-ordinary—like a wallpaper app that has access to your contacts, should be removed immediately.