Chris probably meant it should work if you hold the Ctrl key
down while dragging.
Interesting that if you select a cell with
a number that it copies down the number, but if you type
something A1 into a cell it will increment without having
to hold the ctrl key down.
If you placed your number into a cell and the incemented cell
below it and selected both then use of the fill handle by itself
would provide the series. The other way is to drag the fill handle
down with the right mouse button and then choose linear.
My notes on the fill handle
http://www.mvps.org/dmcritchie/excel/fillhand.htm
BTW, You can insert or delete rows and columns by pressing
SHIFT while dragging the fill handle, which is not what you asked.