I have developed a mobile application that uses Google Maps Android API v1, and I plan to port it to the recent Google Maps Android API v2, as recommended by Google.
It'a API Level 8 (Froyo), because of the Play Services dependency.
Also take care that if you are using API levels 8 - 10 you need to use SupportMapFragment with the Android Support Library: http://developer.android.com/tools/extras/support-library.html , because fragments were only added in API level 11.
As beni said, it works with Android 2.2 and higher version. But you need the android support library for 2.x versions seeing that it use fragments...
i guess you are trying in Android Emulator,
or,
you are trying with Tablet with don't have GPS Feature, Try with GPS enabled device, it should work properly
The Maps API are bundled with Google Play services and are compatible with Android 2.2 and higher. All devices with Android 8 API level support OpenGL 2.0, so devices with Android 2.1 version can't support Google Maps v2. You can check in the Google Documentation.