Question: I have been trying to test in-app-billing by uploading an apk to the Google Developer Console and trying to make a purchase.
I keep getting the message The Play Store Application on your device is outdated and does not support this purchase.
Yet I am using version 3.9 of Google Play.
My device is an HTC Wildfire using Android 2.2.1
I am able to download apps as normal.

Answer: 
Youu need to set min sdk 8 and check all your permissions in manifest.
I have given up on this and decided not to implement inapp billing