See also:
There's a choice of iCloud, Exchange, Gmail, Yahoo!, AOL, Hotmail, MobileMe and others. Bear in mind that you'll need an email address set up beforehand, as this isn't a way to sign up for a new email account.
If you want to set up a Gmail account, you'd be forgiven for choosing the Gmail option. However, this won't give you access to your contacts, so if you want contacts as well, choose Exchange instead.
For Username, enter the first part of your Gmail email address before the @ symbol. Enter your Google Account password in the Password field. [NOTE: If you use Google 2-step verification, you'll need to generate an application-specific password in your Google account settings via a browser first and enter this password here.]