Conversion to Dalvik format failed with error 1

Go to Project » Properties » Java Build Path » Libraries and remove all except the "Android X.Y" (in my case Android 1.5). click OK. Go to Project » Clean » Clean projects selected below » select your project and click OK. That should work.

It is also possible that you have a JAR file located somewhere in your project folders (I had copied the Admob JAR file into my src folder) and THEN added it as a Java Path Library. It does not show up under the Package Explorer, so you don't notice it, but it does get counted twice, causing the dreaded Dalvik error 1.