As CommonsWare pointed out this is likely because of increasing complexity of Android. I had thought that this couldn't be the answer because my 2.3.3 emulator was still slower than my 4.0.3 emulator, but as discovered here, to use graphics acceleration "Use Host GPU", you must have an emulator with at least API 15 (4.0.3):
Start the AVD Manager and create a new AVD with the Target value of Android 4.0.3 (API Level 15), revision 3 or higher.
Therefore 4.0.3 would be the "least complex" version of android that also has gpu acceleration capabilities.