I had the same problem. I just created the AVD with 768 MB RAM and it did run fine!
UPDATE: November 2022
This answer was almost from 10 years ago and will most propably not work on current version of Android Studio.
I had the same problem. I just created the AVD with 768 MB RAM and it did run fine!
UPDATE: November 2022
This answer was almost from 10 years ago and will most propably not work on current version of Android Studio.