QEMU 1.7.0 is now available
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QEMU is a machine emulator.
QEMU can make use of KVM when running a target architecture that is the same as the host architecture (which gives significant performance advantages).
KVM is not strictly dependent on QEMU but they are usually used together. If you don't need the kernel level hw support (i.e. emulating a different architecture to the host platform) then QEMU can be used independently.
With KVM, QEMU actually runs the code for the virtual machine; it just does that inside the KVM kernel module.
This means, for example, that only with KVM you can profile each VCPU simply using "perf". Also, features that require code to run in the CPU threads (for example slowing down CPUs so that migration can converge better) will not work with Xen.
That said, ARM development in QEMU is very active right now and its only a matter of time before one of the supported QEMU ARM targets also happens to be a platform with good Android support.
TL;DR consider sticking to the official Android emulator for now but keep an eye on QEMU.