I ended up in the same situation after upgrading from 2.0.0 to 2.1.0
First of all, make sure you reconfigure the build path by removing the JAR from the old version of PhoneGap and adding a new one.
At this point, I started getting a Dalvik error. Cleaning up the build environment did not help.
So, I delete the old jar from the libs directory and it works.
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