Since Android Market is as open as the sea, as long as you pay USD10 to put your stuff in it, it has been confirmed that the Market itself contained malwares and Trojan viruses that are capable of hijacking your phones. This is obviously damaging for the Android market as it is currently competing with the bigger Apple App store.
Some of these malicious apps are known to disguise themselves as a well-known apps by having similar icons and almost identical name and are able to steal information from your phones such as your banks and email accounts if you access it from your phone.
Even popular apps have been identified as malicious by Google and have been removed from the market, a list of the removed apps can be found at PCmag Security Watch and the list are increasing with more Malicious apps reported everyday.
Google has the ability to signal client devices to remove applications, but there are no reports yet that they have done so.
And if you are trying to install an app and it asks for permission on things that they are not suppose to have, i.e, Flash light app that requires the ability to connect to the internet or write stuff on your phone, you may want to rethink your decision.