I have a project that will involve ultrasonic sensors, input interface(buttons, etc.), Audio output and a GPS shield (cooking hacks)
I would like to know whether i am better off using Android OS or stick with the Raspbian OS.
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Raspbian is a known entity, and you will have no trouble finding existing tutorials and sample code for ultrasonic sensors and buttons or almost anything else you could want. This will make completing your project much easier. The same cannot be said for android on the Pi. As evidence of this the official download page for the Pi does not even list Android, and the FAQ page specifically says that it will not run on the Pi (though both of these facts may change with the new Pi model 2).