error: Target of URI doesn't exist: 'package:test/test.dart'

If you've upgraded to a recent master, you'll find that flutter_test has removed its dependency on package:test. The package hasn't been removed or renamed, but you will need to specifically add it to you dev_dependencies in your pubspec now:

dev_dependencies:
  test: ^1.5.1

The test_api package is just used to unify the versioning and reduce the depencies of flutter_test. It didn't replace package:test. There are also no breaking changes in any of these newer test versions.