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The paradox was published in 1914, (see the reference below ). The proof of the much more famous Banach-Tarski paradox uses Hausdorff's ideas.
This paradox shows that there is no "finitely additive measure" on a sphere defined on all subsets which is equal on congruent pieces. The structure of the group of rotations on the sphere plays a crucial role here — this fact is not true on the plane or the line. In fact, it is possible to define "area" for all bounded subsets in the Euclidean plane (as well as "length" on the real line) such that congruent sets will have equal "area". This area, however, is only finitely additive, so it is not at all a measure. In particular, it implies that if two open subsets of the plane (or the real line) are equi-decomposable then they have equal Lebesgue measure.
Sometimes the Hausdorff paradox refers to another theorem of Hausdorff which was proved in the same paper. Namely, that it is possible to "chop up" the unit interval into countably many pieces which (by translations only) can be reassembled into the interval of length 2. He did these constructions in order to show that there can be no non-trivial translation invariant measure on the real line which assigns a size to all bounded subsets of real numbers. This is very similar in nature to the Vitali set.
Here you will find a link to Hausdorff's original paper (in German) Bemerkung über den Inhalt von Punktmengen, Mathematische Annalen, 75 (1914) 428-434.
Paradoxes Theorems Measure theory