If you are translating theological German in an exam, the writer will likely have a high vocabulary and will not be afraid to use it. You want a thick dictionary which has all or most of those words so you do not have to figure out what the word might mean from its parts. The one I use and is probably the best is:
(available online to Duke students at Credo Reference)
Oxford German Dictionary could also be considered.
(available online to Duke students at Oxford Reference Online).
I originally had a 1991 Collins version from the library and that was awful because it was all black and white and the print was small. The newer versions have the entries in bold navy blue which is a huge improvement. In general, it has been very reliable in having theological words and workable definitions.
These big dictionaries, however, will not be fun to drag everywhere unless you leave your laptop at home and instead carry the dictionary in its spot in your bag.
I love my Collins. I have circled with pencil the entries that I have looked up so they are easier to find the next time. I have also underlined the relevant definition when I have checked with an English translation to confirm I picked the right one.
The first half of the dictionary (1,000 pages) is English-German (which I rarely use) and the second half is German-English (pages 1001-2000) which I constantly use while translating.
I also recommend a supplementary dictionary:
See my review of this book at the Textbooks and Grammars page
For a smaller portable dictionary, I would go with the following pocket dictionary:
Here is an extended quotation from Fred Gaiser of Luther Theological Seminary in his syllabus.
Note the several online dictionaries now available, for example (there may be others):
Also, for the hardness of your hearts, the Google translator, at: http://www.google.com/ig?hl=en&referrer=ign
(Note: This can be useful for shorter and simpler phrases; it cannot be trusted for more complex constructions; unlike a good dictionary, it gives no alternatives or nuances for word meanings; and, of course, regular use of it will ensure that the user never actually learns the language.)