I want to create a game console that runs Android, where do I start? Are there development kits like Arduino for Android?

Try Gameduino http://excamera.com/sphinx/gameduino/

Arduino ADK kit for Android:http://arduino.cc/forum/index.php?topic=63205.0

First off - you cannot run a fully fledged OS like android on an 8 bit machine with 8KB memory. NOT POSSIBLE! So now you have the option of making a *mini* gaming console that works on something like the arduino Mega or DUE (you will have to write everything from scratch here), or an Android based console on an ARM powered Board such as the Raspberry PI or BeagleBone Black. [I assume you will go with this alternative] Now you haven't really specified what you want to do other than "create a game console that runs Android", so I'm not able to help you much further. But two possible options are modify the android source code (i.e. modify the stock android) OR develop an application that will allow you to use the underlying hardware as a gaming console.

Non Android answer : Check out Beagleboard SNES project by hendersa. It's pretty awesome. You can play tonnes of 8 bit games. Answer with Android : You should also check out the BBBAndroid project from Andrew Henderson and Ankur Yadav. Check ankur's github for the latest source code. You can run Android on the beaglebone black and use the gpios/any other interface to connect/create a console. Loads of possibilities. Ankur has a lot of videos on youtube too.

I found this board and I think will work for my project http://www.liquidware.com/shop/show/BB-C4/BeagleBoard+C4 .