Check that the SD card is not mounted via USB. If it is, the game cannot be installed on the SD card. Alternatively, try installing the game on your phone memory instead of a memory / SD card. This can be done by first unmounting or removing the SD card, then installing the game, and then remounting or inserting the card back. Clearing Google Play’s "Cache" and "Data" (Settings > Applications > Manage Applications > Market) has also been known to help.
If you are having the same problem when updating the game, try to find enough space to update the game on the phone memory. Additionally, make sure that you have a strong wireless connection.