Try splitting your app in seperate parts, one trunk containing core features that you develop as a Library, then two separate apps using the same core functionality with specific UI design, one for Tablet version of Android (>3.0 HoneyComb) and one for "phone" versions (<3.0).
My experience with GalaxyTab-likes (basically a tablet with a 'phone' non-HoneyComb version of the OS) is that phone layouts do stretch nicely to fit the 7 inch screen. So it might be enough to add a specialized layout.xml specifically made for big screen. However I didn't even found it necessary on my own app...
EDIT:
also not that if a tablet is running a non-honeycomb OS, 2.2 or 2.3, like is the case with GalaxyTab and many 7 inch tablets, the functionality is exactly the same as on phones, so no specific redesign is needed if not for the layout of UI components.
EDIT:
read this page for specific and detailed information on how to support different screen size in your app. You can specify in your manifest the size of the supported screen for your app with
<manifest ... >
<supports-screens android:requiresSmallestWidthDp="600" />
...
</manifest>
So given the market now supports uploading several apk for the same app, you could compile different version of the app seperately for each screen size, and the market would filter them out according to the sizes in Manifest, so you should even never have to actually check for screen size in your code.
