Happened to me today and left me confused. The thing is that I:
1) Installed APK of my App from different source.
2) Then I wanted to install it from Xamarin Studio.
3) Previous App got uninstalled but new build did not get installed and left me with error:
Deployment failed because of an internal error: Failure [INSTALL_FAILED_UPDATE_INCOMPATIBLE]
Solution:
1) Install on your device the previous APK again.
2) Properly uninstall it from your device.
3) Try to install the new build through Xamarin Studio.
It should work now