Problem importing Planet file into Nominatim

After a gruesome night installing PostgreSQL 9.1, PostGIS 2 and Nominatim 2 on CentOS 6.3 using the instructions here, I am finally at the stage of importing a US planet file.

Problem: In ~/Nominatim/utils, When I attempt to run ./setup.php --osm-file us-northeast.osm.pbf --all, the output I get ends with:

 ["type"]=>
      string(2) "->"
      ["args"]=>
      array(2) {
        [0]=>
        array(9) {
          ["phptype"]=>
          string(5) "pgsql"
          ["dbsyntax"]=>
          string(5) "pgsql"
          ["username"]=>
          string(0) ""
          ["password"]=>
          bool(false)
          ["protocol"]=>
          string(3) "tcp"
          ["hostspec"]=>
          string(0) ""
          ["port"]=>
          bool(false)
          ["socket"]=>
          bool(false)
          ["database"]=>
          string(9) "nominatim"
        }
        [1]=>
        bool(false)
      }
    }
    [5]=>
    array(6) {
      ["file"]=>
      string(35) "/home/myusername/Nominatim/lib/db.php"
      ["line"]=>
      int(7)
      ["function"]=>
      string(7) "connect"
      ["class"]=>
      string(2) "DB"
      ["type"]=>
      string(2) "::"
      ["args"]=>
      array(2) {
        [0]=>
        string(19) "pgsql://@/nominatim"
        [1]=>
        bool(false)
      }
    }
    [6]=>
    array(4) {
      ["file"]=>
      string(40) "/home/myusername/Nominatim/utils/setup.php"
      ["line"]=>
      int(118)
      ["function"]=>
      string(5) "getDB"
      ["args"]=>
      array(0) {
      }
    }
  }
  ["callback"]=>
  NULL
}
DB Error: connect failed

Any idea what went wrong? Do I need to create any database before doing this? Is it supposed to connect without a username and password as shown above?