phpmailer error Could not instantiate mail function

Question

I'm getting the error "Mailer Error: Could not instantiate mail function" when I use the mail() basic example modified slightly for my user id.

When I use the mail function -

mail($to, $subject, $message, $headers);

It works fine, though I'm having trouble sending HTML, which is why I'm trying PHPMailer.

The code:

<?php
require_once('../class.phpmailer.php');

    $mail             = new PHPMailer(); // defaults to using php "mail()"
    $body             = file_get_contents('contents.html');
    $body             = eregi_replace("[\]",'',$body);
        print ($body ); // to verify that I got the html
    $mail->AddReplyTo("reply@domain.com","my name");
    $mail->SetFrom('from@domain.com', 'my name');
    $address = "to@domain.com";
    $mail->AddAddress($address, "her name");
    $mail->Subject    = "PHPMailer Test Subject via mail(), basic";
    $mail->AltBody    = "To view the message, please use an HTML compatible email viewer!";
    $mail->MsgHTML($body);
    $mail->AddAttachment("images/phpmailer.gif");      // attachment
    $mail->AddAttachment("images/phpmailer_mini.gif"); // attachment

    if(!$mail->Send()) {
        echo "Mailer Error: " . $mail->ErrorInfo;
    } else {
        echo "Message sent!";
    }
?>

Can someone please help me with this?