XCode shows: "No provisioned iPhone device is connected"

In case this is helpful for anyone else. I was trying to install a demo iPhone project on my iPod Touch and got the error: "No provisioned iPhone device is connected". I knew that I had the provisioning set up -- but it turns out that I had not upgraded the SDK -- so while the iPod Touch was 4.0, the SDK was 3.2. Once the SDK was updated the install went fine.