I configured Maven 3.0.3 and tried to download a sample project using archetypes with this command:
mvn archetype:generate -DarchetypeGroupId=org.graniteds.
Mac OSX 10.7.5: I tried setting my proxy in the settings.xml file (as mentioned by posters above) in the /conf directory and also in the ~/.m2 directory, but still I got this error. I downloaded the latest version of Maven (3.1.1), and set my PATH variable to reflect the latest install, and it worked for me right off the shelf without any error.