Unable to open any Desktop over VNC connection

Issue

• I have configured vnc server service on my system referring to Kbase  DOC-6606
• I am getting black screen with mouse pointer while connecting to this system over vnc
• Below is observed in vnc logs

Xvnc TigerVNC 1.0.90 - built Jun 30 2010 11:33:01
Copyright (C) 2002-2005 RealVNC Ltd.
Copyright (C) 2000-2006 Constantin Kaplinsky
Copyright (C) 2004-2009 Peter Astrand for Cendio AB
See http://www.tigervnc.org for information on TigerVNC.
Underlying X server release 10707000, The X.Org Foundation

Tue Jun  7 16:37:18 2011
vncext:      VNC extension running!
vncext:      Listening for VNC connections on all interface(s), port 5902
vncext:      created VNC server for screen 0
No protocol specified
xsetroot:  unable to open display ':2'
No protocol specified
vncconfig: unable to open display ":2"
No protocol specified
$DISPLAY is not set or cannot connect to the X server.