I'm posting this for other people who may be experiencing the same problem since I was unable to find anything. Background- I bought a Samsung Galaxy S2 in November. Previously I had the LG Optimus- I used an SD card for storage- everything worked seamlessly when I connected the phone to my laptop via USB to transfer files. As soon as I plugged it in, the screen to turn on the USB storage popped up without any prompting.
Tonight I plugged in my Galaxy S2 for the first time to transfer photos to my laptop. I have used an usb cord to charge the phone multiple times. My laptop wouldn't recognize the phone as a storage device. The only place on the phone settings that I could find that referenced USB storage was under settings/applications/USB utilities. This brought me to a screen that says "USB mass storage: tap the button below to copy files between computer and SD card"- however, the button is grayed out. I spent about 30 minutes on my own trying to figure it out and then I called technical support. The first chick I talked to had no idea what I was talking to. She was asking me to remove the memory card and reinstall it- then she was talking about the possibility that the phone was incompatible with my laptop so I should try to connect the phone with another computer- she asked me to locate and tell her what baseband version the phone is using. We went round and round for a good 20 minutes. I can't even list all of the inane suggestions she made. Finally she transferred me to advanced technical support. No lie- it took all of 5 minutes to solve the problem. The rep I spoke with listened to me- and walked me through the following steps while my phone was connected to laptop via usb cord:
1. First she asked me what os my phone had: ice cream or gingerbread. I had no idea. Go to applications/settings/about phone to check the android version. On my phone it is 4.0.4- this is ice cream.
2. She told me to pull down the status bar of the phone. If you don't know how to do this- put your fingertip at the top of the screen and drag down.
3. Locate the bar that says "USB connected"- tap on that. This brings up the screen for USB mass storage with the green robot icon and a button for "turn on USB storage". Tap the button. Voila- phone and laptop are now communicating to allow for transfer of files.
Totally simple, totally crucial and completely obscure. There is no way I would have figured that out on my own.