I think this is the problem
A little background
Traceview is a graphical viewer for execution logs that you create by using the Debug class to log tracing information in your code. Traceview can help you debug your application and profile its performance. Enabling it creates a .trace file in the sdcard root folder which can then be extracted by ADB and processed by traceview bat file for processing. It also can get added by the DDMS. 
It is a system used internally by the logger. In general unless you are using traceview to extract the trace file this error shouldnt bother you.  You should look at error/logs directly related to your application
How do I enable it:
There are two ways to generate trace logs:
- Include the Debug class in your code and call its methods such as - startMethodTracing()and- stopMethodTracing(), to start and stop
  logging of trace information to disk. This option is very precise
  because you can specify exactly where to start and stop logging trace
  data in your code.
 
- Use the method profiling feature of DDMS to generate trace logs. This option is less precise because you do not modify code, but rather
  specify when to start and stop logging with DDMS. Although you have
  less control on exactly where logging starts and stops, this option is
  useful if you don't have access to the application's code, or if you
  do not need precise log timing. 
But the following restrictions exist for the above
If you are using the Debug class, your application must have
  permission to write to external storage (WRITE_EXTERNAL_STORAGE). 
If you are using DDMS: Android 2.1 and earlier devices must have an SD
  card present and your application must have permission to write to the
  SD card. Android 2.2 and later devices do not need an SD card. The
  trace log files are streamed directly to your development machine.
So in essence the traceFile access requires two things
1.) Permission to write a trace log file i.e. WRITE_EXTERNAL_STORAGE and READ_EXTERNAL_STORAGE for good measure
2.) An emulator with an SDCard attached with sufficient space. The doc doesnt say if this is only for DDMS but also for debug, so I am assuming this is also true for debugging via the application.
What do I do with this error:
Now the error is essentially a fall out of either not having the sdcard path to create a tracefile or not having permission to access it. This is an old thread, but the dev behind the bounty, check if are meeting the two prerequisites. You can then go search for the .trace file in the sdcard folder in your emulator. If it exists it shouldn't be giving you this problem, if it doesnt try creating it by adding the startMethodTracing to your app.
I'm not sure why it automatically looks for this file when the logger kicks in. I think when an error/log event occurs , the logger internally tries to write to trace file and does not find it, in which case it throws the error.Having scoured through the docs, I don't find too many references to why this is automatically on. 
But in general this doesn't affect you directly, you should check direct application logs/errors. 
Also as an aside Android 2.2 and later devices do not need an SD card for DDMS trace logging. The trace log files are streamed directly to your development machine. 
Additional information on Traceview: 
Copying Trace Files to a Host Machine 
After your application has run
  and the system has created your trace files .trace on
  a device or emulator, you must copy those files to your development
  computer. You can use adb pull to copy the files. Here's an example
  that shows how to copy an example file, calc.trace, from the default
  location on the emulator to the /tmp directory on the emulator host
  machine:
adb pull /sdcard/calc.trace /tmp Viewing Trace Files in Traceview To
  run Traceview and view the trace files, enter traceview
  . For example, to run Traceview on the example files
  copied in the previous section, use:
traceview /tmp/calc Note: If you are trying to view the trace logs of
  an application that is built with ProGuard enabled (release mode
  build), some method and member names might be obfuscated. You can use
  the Proguard mapping.txt file to figure out the original unobfuscated
  names. For more information on this file, see the Proguard
  documentation.
I think any other answer regarding positioning of oncreate statements or removing uses-sdk are not related, but this is Android and I could be wrong. Would be useful to redirect this question to an android engineer or post it as a bug
More in the docs