Android  HC-05  Arduino communication issue
As mentioned by @alex.forencich, SoftwareSerial is not designed to support simultaneous bi-directional communication.

I found a link to AltSoftSerial library on Arduino site, and this lib seems to work properly in my setup. 

To convert from SoftwareSerial to AltSoftSerial you need to change the pins that HC-05 is connected to (on Arduino Uno these are pins 8,9), and to make this minor change in the code:

//#include &lt;SoftwareSerial.h&gt;
//SoftwareSerial swSerial(10, 11);

#include &lt;AltSoftSerial.h&gt;
AltSoftSerial swSerial;