Android error: Failed to install *.apk on device *: timeout

Do most important this, when your faced this problem, lets hope you have to through away this problem.

Try changing the ADB connection timeout. I think it defaults that to 5000ms and I changed mine to 10000ms to get rid of that problem.
If you are in Eclipse, you can do this by going through

Window-> Preferences -> Android -> DDMS -> ADB Connection Timeout (ms)

Sometime, it works by doing this also:

don't use USB 3.0 ports for connection beetwen PC and Android phone!
USB 3.0 - Port with blue tongue
USB 2.0 - Port with black tongue

Happy coding!!!