Java 7 (1.7) is supported. The issue you are seeing if not related to the Java version. Note however that you should set the project compliance level to 1.6 as Android is based on Java 6.
Thanks Erel, I pieced together pieces of information from the forum and Google.
It was to do with the .so file (which I had to add to the project) but mainly the problem was that although the file was called libABC.so I only needed the "ABC" part in the loadlibrary command.
My library is now working. Thanks for the update about 1.7, Ill change my target version back to 1.7