You are using a site collection administrator account but the problem is that the site collection admin account doesn't have access to the SP config database and content database. Note that Visual Studio goes against the API directly so it can't do anything until it can read from the database. Here's what's in the SP log:
02/17/2012 15:08:49.68 vssphost4.exe (0x071C) 0x136C SharePoint Foundation Database 880j High SqlError: 'Login failed for user 'us\siteAdminDeveloper'.' Source: '.Net SqlClient Data Provider' Number: 18456 State: 1 Class: 14 Procedure: '' LineNumber: 65536 Server: 'US.local,1433'
02/17/2012 15:08:49.69 vssphost4.exe (0x071C) 0x136C SharePoint Foundation Database 3351 Critical SQL database login for 'SharePoint_Config' on instance 'SqlHost' failed. Additional error information from SQL Server is included below. Login failed for user 'US\siteAdminDeveloper'.
Since you are doing development on SharePoint, use an account that's an Farm Administrator to avoid problems like this.
