WiFi 'Create Network' not connecting to internet.

I never experienced this problem before with Snow Leopard and it's 'Airport' function.

I want to create a WiFi network on my iMac so that other devices can connect and share my computer's internet. For example: My iPhone 4 and Apple TV.

Whenever I create a network, I can see that network in my iPhone's list of WiFi connections, however there is no internet connection when I connect to it.

In 'Network Preferences', the status of my WiFi is ON but says underneath: Wi-Fi has the self-assigned IP address 16xxxxxxxxx and will not be able to connect to the Internet.

Please help me to allow my newly created WiFi network to have an active internet connection when I connect it with other devices like Apple TV or iPhone 4.

Again, I would like other devices to connect to my iMac via WiFi, while my iMac has a fine internet connection using Ethernet.