Hello ArunKarkare,
I also encountered the same issue with the program and i changed it a bit to see the working. After changing the working is the same as described in the book. In the book the textView, EditText and the Button component are added to the main.xml but Activity2.xml file is shown in the image which consists of all this.
I am providing you the link to the file which i modified to make it work.I have added a button and used that to navigate to the other activity instead of using the DPAD action.
The target SDK for that is 2.3.3 API 10... You can download it and test it...
Almost all the code for the java files remains the same except for the button action only.....
http://sdrv.ms/10OiDoy
I hope i have helped you solve your issue...
Regards,
Nikhil