Pretty simple but annoying and possibly world ending bug:

If you have an exported APK installed and then export an updated version (say you fixed some bugs) android will not update it. Selecting the APK will inform you that "This will overwrite the existing application" but when it comes to installing the updated software I get the message "there is insufficient memmory to install".

Device tested on:

HTC Legend (Phone)
1GHZ Processor
512MB Ram
Android 2.2
1.8 GB Free Space