Thanks Max and Snjezana. I am able to get Jboss tools 3.2 working with Seam 2.2.
However with Jboss tools 3.1, when I tried to created a seam project, I remember I was stuck at one the steps where we mention the Seam runtime. It will say that I have a different version of Seam and wouldnt move forward. Not sure if I was missing something.
Thanks anyway and I am just about to start my first seam 2.2 app. :)