Stopping & starting music on incoming calls

I think that AudioManager is the best and fast solution. Here there is my implementation example:

public class MyActivity extends Activity implements OnAudioFocusChangeListener {

private AudioManager mAudioManager;

@Override
public void onCreate(Bundle savedInstanceState) {
    mAudioManager = (AudioManager) getSystemService(Context.AUDIO_SERVICE);
    mAudioManager.requestAudioFocus(this, AudioManager.STREAM_MUSIC, AudioManager.AUDIOFOCUS_GAIN);
}

@Override
 public void onDestroy(){
     super.onDestroy();
     ...
     mAudioManager.abandonAudioFocus(this);
     ...
 }

@Override
public void onAudioFocusChange(int focusChange) {
    if(focusChange<=0) {
        //LOSS -> PAUSE
    } else {
        //GAIN -> PLAY
       }
   }    
}

I hope it's helpful for you :-)

I think requestAudioFocus() should be able to handle this case automatically. You don't need to check call state explicitly.

Audio Focus is cooperative in nature. That is, applications are expected (and highly encouraged) to comply with the audio focus guidelines, but the rules are not enforced by the system. If an application wants to play loud music even after losing audio focus, nothing in the system will prevent that. However, the user is more likely to have a bad experience and will be more likely to uninstall the misbehaving application.

To request audio focus, you must call requestAudioFocus() from the AudioManager, as the example below demonstrates:

AudioManager audioManager = (AudioManager) getSystemService(Context.AUDIO_SERVICE);
int result = audioManager.requestAudioFocus(this, AudioManager.STREAM_MUSIC,
AudioManager.AUDIOFOCUS_GAIN);

if (result != AudioManager.AUDIOFOCUS_REQUEST_GRANTED) {
    // could not get audio focus.
}

There are a few things you can do:

First of all, you can listen for changes in the call state using a PhoneStateListener. You can register the listener in the TelephonyManager:

PhoneStateListener phoneStateListener = new PhoneStateListener() {
    @Override
    public void onCallStateChanged(int state, String incomingNumber) {
        if (state == TelephonyManager.CALL_STATE_RINGING) {
            //Incoming call: Pause music
        } else if(state == TelephonyManager.CALL_STATE_IDLE) {
            //Not in call: Play music
        } else if(state == TelephonyManager.CALL_STATE_OFFHOOK) {
            //A call is dialing, active or on hold
        }
        super.onCallStateChanged(state, incomingNumber);
    }
};
TelephonyManager mgr = (TelephonyManager) getSystemService(TELEPHONY_SERVICE);
if(mgr != null) {
    mgr.listen(phoneStateListener, PhoneStateListener.LISTEN_CALL_STATE);
}

Remember to unregister the listener when it's no longer needed using the PhoneStateListener.LISTEN_NONE:

TelephonyManager mgr = (TelephonyManager) getSystemService(TELEPHONY_SERVICE);
if(mgr != null) {
    mgr.listen(phoneStateListener, PhoneStateListener.LISTEN_NONE);
}

For more information read the documentation.

Another thing you can do is listening for the broadcast android.intent.action.PHONE_STATE. It will contain the extra TelephonyManager.EXTRA_STATE which will give you information about the call. Take a look at the documentation here.

Please note that you'll need the android.permission.READ_PHONE_STATE-permission in both cases.