I came across this error and lost two days trying to get it figured out so I thought I'd share the resolution.
I recently built a new build server and as usual, just installed the latest version of the Java JDK (which is now 7). The build seemed to work OK and there are no errors reported, however when attempting to install the APK, it fails and the logcat reports an error containing "has invalid digest".
I'm not exactly sure of the cause but is related to the way the APK is signed when running the JDK7.
Once I uninstalled JDK7 and installed JDK6, all was well.