Hey guys I managed to solve the issue. However,do take note I am using wordpress version 2.9.2 and Contact Form 7 version 2.2 as well as an Gmail account.
1. Download the latest version of WP Mail SMTP. At current time of posting it is Version 0.8.3.
2. Install and activate WP Mail SMTP plugin
3. Sign up for a Gmail account or google apps account if you do not have one.
4. Now go to the WP mail Options page.
5. Under the From Email form, type in your gmail address. For the From Name form, you can just leave it blank if you want to.
6. Under mailer, select "send all WordPress emails via SMTP"
7. For the remaining options do this:
SMTP Host: smtp.gmail.com
SMTP Port: 465
Username: your full gmail address
Password: your gmail password
8. Click update options and you are done!
After doing all these steps you can test the contact form 7 now. It should work.
Using WP Mail SMTP seems to be better as previously, using CF7 to send mail takes about 15 mins to arrive. Now, with the Cf7 plugin, the mail arrives almost instantly.
Hopefully, the steps I wrote above help those who are having problems. Good luck!