I tried to upgrade my perfectly working Android dev system yesterday with the new 2.3 SDK and associated ADT. After the upgrade, I couldn't get Eclipse to compile my project correctly, nor could I access the Android SDK and AVD Manager from Eclipse. Eclipse seems to have lost track of where the Android SDK was installed. I would give it the name of the folder, but then it could come back saying it couldn't find .../tools/adb.exe. Yes I know adb.exe moved. But notice that the error was looking for it in the old spot. It's like I didn't have the new ADT, but I checked and rechecked and I did. I'm thinking that the new ADT didn't install correctly for some reason, and/or I wasn't checking it's version properly.
When I searched around for a solution, everyone pointed out that adb moved and that the classpath needed to change. But there isn't really a relevant classpath in this situation. There is just a path to the Android SDK that needs to be set in Eclipse. I even tried the trick were I copied adb.exe back to the tools folder. At that point, Eclipse could find the Android SDK, but then some other problem that crept up so I gave up on that hole.
Anyway, I ended up blowing away my eclipse and Android SDK folders and starting over. Now it works fine. I'm sure there's a better solution, but I was sick of messing with it.
I'm now 2 for 4 on using Android SDK and AVD Manager to do an upgrade.
Hope this helps someone.
Update: Upon further review, I seem to have my stackoverflow topics mixed up since the OP never mentioned Eclipse.