I don't know- that is the only thing I change, and it goes from working to not working.
I go through the process here:http://chrismweb.com/2011/10/18/how-to-start-creating-android-games-using-the-libgdx-game-development-framework/#more-784
I added the Java project, added the libgdx .jar files, just like in the video tutorial, and the tutorial on the google code site- but it only works using Java 1.6....
I had uninstalled everything, to start from scratch, so maybe it was an issue of having the older SDK installed and the newest?
It's literally like a switch though - change java project to 1.6, android version runs. Change to 1.7, it can't find the Game class when loading on android, and crashes.