A member in the Google Groups says that he is unable to link his Google AdWords Starter Edition account with his Google Analytics account. He believes that the reason for this is because he has the Starter Edition of AdWords:
I am using the Starter version of Adwords and have an Analytics account as well, all under the same Google email / password. For some reason I cannot figure out how to link the two. Is the fact I'm using Starter Edition prohibiting me from doing so?
An official Google representative confirms his suspicions. AdWords Starter Editions can not link their accounts to Google Analytics.
You're correct that your Analytics account can't be linked to your AdWords account because you're using the Starter Edition. If you'd like to link the two accounts, you can upgrade to the Standard Edition.
You can find instructions for upgrading at: https://adwords.google.com/support/bin/answer.py?answer=31757
Also, here's how to link your AdWords account to your Analytics account: http://www.google.com/support/analytics/bin/answer.py?answer=26789
Discussion continues in Google Groups.