Transfer data through audio jack cable over two Android devices
I'm looking for the same, I got one awesome explination about Transfering data using audio signal in android by Sudar , go through once that may be helpful to you.
The slides here are even more detailed: Showing how to communicate with an Arduino and reading a light signal and convert it A/D.
http://de.slideshare.net/wolfpaulus/android-arduino-and-the-headphone-jack