The maximum size for Android apps will be taking one giant leap for mobile-kind according to an announcement on the Android Developers blog. Apps have previously been limited to a paltry 50MB, which is fine for conventional app downloads, but Google have opted to increase the file size ceiling to 4GB allow for other application types like 3D interactive games.
The APK file that apps use will still be limited to 50MB but up to two 2GB expansion files (or smaller) can be attached to the primary APK, allowing for far more content per app. The Android Market will reflect the full file size prior to a download starting and will also be hosting the larger files for developers. This will hopefully mean that there won’t be an overly large price bump in larger apps.
Source: Android Developer blog via CNET