It's possible to publish daily updates for your application on Google's Android Market, but I have an assumption that users don't like to get frequent updates. How can I determine when I should publish updates? Is there an optimum interval to balance between delivering new features and bug fixes while not upsetting my user base?
While there can't some general best frequency for updates, here are some factors that you should look at when making your decision:
Severity of the update. Fixes for critical bugs and security vulnerabilities should of course be pushed out as soon as possible. But if you only have minor changes, you might want to wait until you collected a few of those.
User expectations. If the users expect updates bringing major enhancements, you might not want to push the same kind of update just to fix a typo. :-)
Ease of applying the update. If the update applies itself in the background without needing any user interaction, I doubt anybody would mind frequent updates. If OTOH applying an update requires several interaction steps by the user, thus interrupting his workflow, frequent updates are quite annoying. E.g. almost every time I use NeoOffice, it tells me there is a new version available. But I would have to download and install it manually, taking me away from my original task. So I rarely updated, but was still annoyed every time.
Likelihood to break something else with the update. If there are external plugins/extensions/whatever depending on you application, they should be aware and be able to depend on your update schedule. They also should have enough time to adjust to the changes you made before the update is applied. E.g. when Firefox recently changed to a more rapid update cycle, it broke many of the less-maintained extensions, because the developers couldn't keep up with the rapidly changing version numbers.
Dependence on external factors/libraries/APIs/.... If the update depends on changes of external libraries, APIs, or (as Manfred Moser said) a server side application, you'll have to wait until those are finished.
In my personal opinion anything that improves something for the user is worth a release. Especially with automatic updates and potentially updates only on wifi this is not disrupting to users imho.
Of course other factors will influence your release schedule as well. E.g. if your marketing team is still stuck in the old release habit with lots of features you might need to accumulate some for a marketable release.
Or if you are working with a server side application you might be tied to it updating as well.
So overall the answer probably is "It depends;-)" but more often is better. E.g. also consider upgrades to websites/webapplications like gmail or twitter.. many of these get daily updates..