The Following Tutorial Describes very thoroughly how to decompile APK file to get its source code. I have tried it myself and its working. Keep in mind it only gets the "JAVA" code not the layouts and any other resources.
http://a4apphack.com/security/sec-code/extract-android-apk-from-market-and-decompile-it-to-java-source
http://a4apphack.com/security/sec-code/extract-android-apk-from-market-and-decompile-it-to-java-source
