are you using eclipse with the adt plugin?
if so then you can choose from several android OS versions, i would develop for the lowest OS that supports all the features you want then test either on market with a free "lite" version in demo or use the emulators.
i wouldnt target any particular device but be aware of screen sizes/minimum cpu specs
again aim for the lowest device capable of supporting your app, if your code is clean then it should scale up the device list nicely (scale up isnt the right term but... i guess you know what i mean) if you pm me with an apk i can test on a hero for you, so theres one part done, if you know what your doing you can set a whole range of devices with specialist hardware in the "my_avd" part of eclipse, (funny thing is they work as proper devices web browsing and everything bar things that require cdma/gsm connection)
anyway, target a popular device on a 2.1/2.2 platform or if your app is simple enough target 1.5/1.6 platform, keep screen references absolute rather than imagining the screen of your target phone (ie, fillparent not defined sizes) aim for hvga screen qualcomm 528mhz armv6 and vga snapdragon armv7 if it will run on both of those then it should run on all htc devices and the droid too