There are some points to keep in mind while invoking save method of FileReference:
1. save method require Flash Player 10, so make sure you have set compiler settings to 10. (In Flex Builder, under project properties you can set it).
2. FileReference.save method can only be invoked in response to user interacted event (for e.g. click, keydown events).
So this should only be called in such event handlers.
More details:
http://livedocs.adobe.com/flex/3/langref/flash/net/FileReference.html#save()