Android Police reports Google removed all ad blockers from the Google Play store for violating section 4.4 of the Play Store Developer Distribution Agreement.
Popular app AdAway was among those removed, and received notice that its app was in violation of section 4.4 of the Play Store Developer Distribution Agreement. Here is the cited section:
4.4 Prohibited Actions. You agree that you will not engage in any activity with the Market, including the development or distribution of Products, that interferes with, disrupts, damages, or accesses in an unauthorized manner the devices, servers, networks, or other properties or services of any third party including, but not limited to, Android users, Google or any mobile network operator. You may not use customer information obtained from the Market to sell or distribute Products outside of the Market.
There really isn't much wiggle room on interpretation here - ad blockers clearly do interfere with the properties and services of third parties (including Google, which is probably a big one not to interfere with). Most of the popular ad-blocking tools seem to have vanished, including Adblock Plus, which recently fell victim to a bug fix in Android that made the service much more difficult to use. Another very widely-downloaded solution, AdFree Android, is also gone.