Kindly post your installation details - operating system of server, server, database, php versions and email account sample details along with config.inc.php settings to investigate the problem. Also check if your email smtp service provider allows you to send mail using the settings in the config file. Also post the relevent portions of your server's error logs.
gila, if your using localhost as the email host you have to make sure that there is an email server running on that server, ie. postfix, sendmail or similar
if using a remote server make sure you have entered all the correct email login details into config.php
also you can use gmail as your smtp server - never done it but if you google 'gmail as smtp server' you should be able to find out how to do it