Android users have been waiting for an iTunes-like Android service that would allow them to search for apps and purchase them online, just like iPhone owners can do with iTunes. Google has answered that call with the help of all their cloud computing experience, setting up a web-based Android Market at that doesn’t require wires or syncing of any kind. Purchases made on the browser Market will automatically start downloads on the Android-based phone or tablet linked with the account, minimizing the time and hassle of transferring purchased apps from one place to another.

Google also talked about the addition of in-app purchases to its apps, another feature already being maximized by iOS devices, that will undoubtedly greatly increase the amount of revenue seen by Android app developers and probably be handy for users, if somewhat annoying. The software development kits for in-app purchases are being released to developers today, and the service will go live at the end of the quarter, according to Google.

In showing off the in-app purchases, Google had Disney (DIS) Mobile on-hand to show off an Android version of Tap Tap Revenge 4, a rhythm tapping game that the company figures is among the most popular apps ever. On the iPhone, it’s a popular franchise and makes all its dough from in-app purchases — the app itself is free, but songs to tap along to are for sale.

Google preps Honeycomb to take on iPad

Though the changes to apps and how Android users will download them might effect more people and developers, Honeycomb was Google’s star. The platform has a slick user interface and is specifically designed for tablets — which means, it is specifically designed to take on the iPad.

Demos of devices running the OS showed some interesting new features: specifically, rather than full-on apps, the home screen of Honeycomb includes a lot of smaller-scale widget applications, showing incoming emails and music playback, for example. Google also has created notifications for incoming messages and other items that are “richer” than what you’d experience on an Android phone — messages and email notifications can include contact photos, for example, and notifications about music could even allow instant playback of the track.

When Google showed off a two-paned version of Gmail, it talked about how developers can reuse different elements from applications for other user interfaces and applications. These “application fragments” mean developers can use pieces of them in other apps, and allow more global control of different elements of Android.

What’s clear from the presentation is that Honeycomb is poised to change the tablet battle as it stands today. While, as Crunch Gear points out, up to now the debate has been over hardware as tablets have used a non-tablet-specific brand of Android, Honeycomb will provide tablets with features much more akin to the iPad. People making the choice between the two operating systems will have a much more level playing field to look at, and the choices between them will come down to issues like functionality and ease of use.

And with some of the powerful, expensive tablets coming out that will be using Honeycomb, it will be interesting to see how the battle heats up as Apple (AAPL) prepares to launch the iPad 2. Android users are going to have a lot of options in 2011 — whether those choices and Honeycomb are enough to stand up to the iPad brand, however, remains to be seen.