Android Emulator - Trouble creating user accounts

I need a user account or two in my Android Emulator so that I can test some texting/mailing function of my app. The trouble is that when I try to do this in the emulator:

Settings --> Accounts & sync --> Add account --> (my_gmail_account/password) --> Next

I get the message "Setup could not finish - Unable to open connection to server."

My emulator works fine & is able to connect to internet through it's browser. So not sure why it is not working. Has anyone run across this problem?

Thanks!

@Varun's solution works for me. There are two things that must be configured correctly: the emulator and your eclipse project.

To set up the emulator, you'll have to create a new one. Instead of selecting an Android target, select the Google APIs target that you need (this target includes the Android platform, but "Android" doesn't appear in it's title). See screenshot:

That emulator should now be able to sign into a gmail account.

To configure your eclipse project, right click the project in the package explorer. Select "Properties" from the dropdown menu. Click "Android" on the left of the properties window, and select the same Google APIs target that you selected for your emulator. See screenshot:

You should also make sure that the correct emulator is selected to run the project. To do this, select "Run/Debug Settings" on the left of the project properties window. Edit the launch settings, and select the appropriate emulator (AVD) under the "Targets" tab.

This worked for me!

I know this might be looong overdue, but if you're using ICS emulator, you need to push GoogleServicesFramework.apk and GoogleLoginService.apk. After that you can add user accounts.