It is failing because not all devices support arbitrary preview sizes. Apparently some do but you can’t rely on it. In your surfaceChanged method you need to do something like this:
public void surfaceChanged(SurfaceHolder holder, int format, int w, int h) {
Camera.Parameters parameters = camera.getParameters();
List<Camera.Size> previewSizes = parameters.getSupportedPreviewSizes();
// You need to choose the most appropriate previewSize for your app
Camera.Size previewSize = // .... select one of previewSizes here
parameters.setPreviewSize(previewSize.width, previewSize.height);
camera.setParameters(parameters);
camera.startPreview();
}
You’ll have to figure out a way to scale this so that you don’t lose the aspect ratio etc.
For reference here is the Android SDK doc.