Let's see if you can do a series of test to try to isolate the issue.
I took a screenshot of my avd3 setup. Try and create this same setup.
Then start avd3 via the AVD manager. Don't run your program. Wait for avd3 to boot fully. If avd3 doesn't boot, then there's something wrong with your setup at any of the levels of Linux, SDK or AVD.
If avd3 boots, open a terminal (aka shell, console or command prompt) and try this command.
This should connect you to avd3. You should get output like this.
Trying 127.0.0.1...
Connected to localhost.
Escape character is '^]'.
Android Console: type 'help' for a list of commands
OK
If you cannot connect to avd3, then I would think you have a firewall blocking access.
If you can connect, just issue the quit command to disconnect.
Go into Eclipse, go into the DDMS perspective. In the Devices view, go into the view menu and choose Reset ADB. You should then see avd3 (as emulator-5554) in the devices tree. If you don't, there's something wrong with your ADB.
In the Emulator Control view, enter a phone number and click call. This is will simulate an incoming call from that number on avd3. You should see the incoming call on the avd3. If you don't there's something wrong with your ADT plugin.
