Unable to resolve target 'Google Inc.:Google APIs:16'

Modify the AndroidManifest.xml file so that any versions in there are Android 2.2. Also change the version of the SDK used by right clicking the project in eclipse and go to properties->android and change the version to 2.2. Some things might break though. Usually the version declared in the manifest is declared because the project uses SDK features only available for that version or later.

Your app will still work on older versions even if you are targeting newer version. The target is what version you have tested your app to work on. If you target the most recent version (API 16), then your app will not be put in 'compatibility mode' when running on older phones. For example, if you have a menu button in 2.x but you target API 16, this menu button will not show up on certain phones since you're supposed to be using the ActionBar.

The minSdkVersion is what you are thinking of, which will make sure your app runs on older versions:

<uses-sdk android:minSdkVersion="8" />

So the solution to your problem is just to download the newest API level through the SDK Manager. You most likely just don't have API 16 installed.