depends who you want to make apps for. People on higher resolution phones are more likely to buy your application than somebody with a low resolution phone. Resolution is a decent indication of any as what the rest of the spec will look like. 480x800 is now 2 years old ( samsung galaxy s2 had it as does the ACE) your making a game application you say? Unless its tower defence how many 2 year old phones are going to be able to run it at decent fps.
It's not going to be full 3D FPS or anything. To start with, it's going to be simple 2D in openGL. Most phones right back to android 2.1 should be able to run it at a minimum of 30fps from what I've seen and done so far. It's a pretty efficient SDK. As I've said as well, it's not only going to run on 480x800, it will run on any resolution and scale accordingly. This is just to get an idea of what sort of scale my initial sprites/textures need/should be. Obviously if I'd based around 240x320, scaling up to anything bigger than 480x800 wouldn't look great. I can always rescale afterwards again if I need to. Just adjust a few numbers.
Original assets should target the highest DPI around, you can scale down but not up. Then it's a case of potentially different UIs for different screen sizes. Ideally you don't want to target a 'specific screen' as canonical. If you do want a 'one size fits all', then you make the UI work with the smallest screen size you're supporting, and provide assets for the different DPIs as neccesary. In short targetting a specific screen is a bad idea, regardless of platform.
