Performance is dependent upon the application, just like it is for any other platform.
Most Android applications will not feel particularly slow because they are written in Java and running on the Dalvik VM. That is because most applications do not spend a lot of time doing work -- they mostly sit around and wait for the user to click something.
Applications that do a lot of work all the time, such as many games, will not perform as well on Android as they will on platforms where you code in C. However, the core Android team has indicated that eventually there will be a "native SDK" to help people build extensions in C to be used for processor-intensive logic. This is complicated, because Android will eventually run on several chipsets.