I have created a sample hello world application and when I launch it using SDK 1.1 i get the following error
Failed Installing com.test: pkg: /data/local/tmpl/app.apk
My JAVA_HOME is pointed correctly in classpath
You're using Titanium SDK version 1.1? You might consider upgrading to 1.4.0, the latest mobile SDK release and trying to generate a new project with that version.