1] Under Options > Writing I have entered following:
Mail server: pop.gmail.com
Login name: [Entered gmail username i.e email@example.com]
Password: [Entered password here]
2] I then sent an email to test "post by email" to my
gmail a/c specified in #1 above.
3] Browser Activation
I went to http://sitename.com.au/wp-mail.php in Firefox
[It's a .com.au site and wordpress is installed in root dir]
Now for the Problem:
I am getting this error:
POP3 connect: Error 
I have read http://codex.wordpress.org/Blog_by_Email and will set up a cron job after post by email starts working.