It looks like there's a uassert in indexkey.cpp, but it isn't correct. I think it should be:

uassert( 13529 , "sparse only works for single field keys" , ! _sparse || _nFields == 1 );

Example:

admin> db.foo.ensureIndex(

{x:1,y:1}

,

{sparse:true,unique:true}

)
admin> db.foo.getIndexes()
[
{
"v" : 1,
"key" :

{ "_id" : 1 }

,
"ns" : "admin.foo",
"name" : "id"
},
{
"v" : 1,
"key" :

{ "x" : 1, "y" : 1 }

,
"unique" : true,
"ns" : "admin.foo",
"name" : "x_1_y_1",
"sparse" : true
}
]