Not quite my interpretation...
An "Entry" is merely a description of the proposed application:
"In no more than 200 words entrants will be required to describe a proposed mobile device application to use on an Google android device in sufficient detail for the Promoter to understand the nature of the application (“Entry”)."
The "Application" is separately described and the terms and conditions do not ask you to give any warranty (and corresponding indemnity) in respect of the Application.
Any infringement would therefore be for breach of copyright (and perhaps moral rights) in the words of your Entry only. So the message is, don't cut and paste from iTunes!
Still, an indemnity is a bit strong. I cannot imagine that Vodafone would suffer much loss even if the Entry was copied from a third party source.
It is possible to infringe copyright in software by virtue of "non-literal" copying of computer programs (i.e. by re-engineering them) but given the clear disjunct between the Entry (simply a description) and the Application, I think it is unlikely. That is, unless the description of the Entry very closely matched the original program (e.g. described functions, screen layouts etc. in close detail). The definition of "Entry" does not require that much detail and it would be difficult to do in 200 words!
It would also be ridiculous for Vodafone to suggest that an Entry had to be an entirely new idea for a class of applications; that would prevent me from suggestions things like "To do list application" or "shop barcode internet price match application" etc. (hmm... perhaps I should win the phone ;) Nothing on the Vodafone website gives this impression and it also does not accord with copyright law which only protects the expression of an idea, not the idea itself.
As for patents, the Application may well infringe (in jurisdictions which allow pure software patents) as the embodiment of a patented idea, but not the Entry which is merely a description. As above you are not warranting the Application.
Just my £0.02. Anyone think differently?