Yes the API Key is compulsory, otherwise Google won't authorize your app to use maps.
To get an API Key goto the Google API Console: https://code.google.com/apis/console/
Ensure "Google Maps Android API v2" is checked and then goto API Access and click "Create New Android Key...."
This allows you to enter your package name i.e "com.example.whatever" and your SHA-1 fingerprint (which can be grabbed from eclipse or using keytool). All information can be found in the above link.
Good luck