Blame the lawyers
Unfortunately, in this country, if you allow someone to use your trademark name, you can lose it. So if Google allowed anyone to use the name "Android" or, for that matter, "Google" and did not take action to stop it, then a court might well rule that they've lost the trademark. This has happened in the past.
Of course, that's not saying Google couldn't have contacted the author and asked him to change the name instead of just removing the app without warning.