While working with Android 4.0 and later you may face this error. This error appears when you try to create the AVD for Android 4.0 or later. Root cause of the error is that you have not downloaded the "ARM EABI v7a System Image" while downloading the Android SDK.
In order to resolve the error, launch the Android SDK manager. Install the "ARM EABI System Image" for the Android version that you are using. Once the "ARM EABI System Image" is installed, go ahead and create the AVD.