The reason is that port 80 (which is used by iis and most other webservers) is taken by some other program. In my case, this was Skype. However, this could be any other p2p or torrent program.
The easiest way out is to stop other programs such as skype, torrent etc, and attempt to start the IIS.
However, there is an option that is available in Skype which keeps skype away from taking port 80. It is, Tools -> options -> Advanced ->Connection-> Use port 80 and 443 as alternatives for incoming connections. Uncheck this option, and skype would no more borrow webserver or sql server default ports…(thanks hethu for the skype tip)
