I ended up deleting all the worlds (new and old), then uninstalling and reinstalling MCPE 0.9.0. So far it seems OK.
Similar issue also seen on Nexus 7 (2012) on android 4.4. When power button is pressed (to pause the game) and the repressed the game is locked and non-functional. Pressing home button and using app switcher to access the game does not help. To play the game it is necessary to force it to stop (i do this by swiping app from app switcher) and restarting.
I ended up deleting all the existing worlds, then uninstalling and reinstalling MCPE 0.9.0. This has allowed me to generate worlds successfully.