.onion name collision
The output of SHA1 has a length of 160 bit. To make handling the URLs more convenient we only use the first half of the hash, so 80 bit remain. Taking advantage of the Birthday Attack, entropy can be reduced to 40 bit. That's why collisions could be found with moderate means. This is not a problem for Tor since all an attacker might be able to do is create two different public keys that match the same .onion name. He would not be able to impersonate already existing hidden services.
Why he would not be able? As I know, there is no built-in way to authenticate a HS if there is a collision: the legit and fake HSes will be indistinguishable from each other.