I've found a android tutorial explaining Android 2.2 API 8 on eclipse Helios for free on youtube. My question is it okay if I want to learn Android 4.1 with API 16 on eclipse Juno? If not, is there a book that I can purchase or other resources I can use to learn Android 4.1? Lastly, is Android 4.1 API 16 backward compatible with the other API's and is it the best API to learn? Thanks in advance!
You can use any SDK level and version of Eclipse (greater than or equal to Helios) to develop Android apps.
There isn't any real "best" SDK level to learn or develop for, and you should actually be developing for several at once. They each have changes from the last, so keep that in mind as you work. According to panels at I/O, Google feels that it's best practice to user the highest SDK you support as your target (for the app I'm working on, that's 4.1 Jelly Bean), and have a minimum SDK level for the lowest API level you support (2.2 Froyo in my app). Keep in mind that you may have to have different code for different API levels depending on what's available in each SDK level.
All SDK levels are backwards compatible with previous SDK levels, but each level generally adds features that you can't use on older SDK levels, or can't do so without help from Google's Support Library (which can be easily added to your project in Eclipse) or some other external library.