If an Android user downloads the app and sets it as the device’s wallpaper, the app then prompts the user to install additional files. “If the user agrees, the virus payload is delivered within a file called ‘Android System Service,’” TrustGo explained.

via Resilient ‘SMSZombie’ Infects 500,000 Android Users in China | SecurityWeek.Com.

The article states that this only affects users of China Mobile.  I find it interesting that to get infected not only do you have to install the bad app, you also have to agree to install these additional files.  Wouldn’t the second prompt raise some suspicion?