ive got alot in common with a guy but im too shy to talk to him in college. whenever he did talk to me online he was always upbeat and cheerful.

A lot of guys are not good at verbal communication with women.  Usually these guys compensate by being good at written communication with women (like chatting to a lady by MSN, letter, text or e-mail).  It is much easier for a guy to communicate by MSN, because he doesn't have to immediately read your body language and understand what you are saying and think of something to say in reply (too much multi-tasking for a guys bloke to cope with).  In essence, all he needs to do is understand what you are saying and reply which makes it much simpler for him.  He can also get away with saying something wrong, without the embarrassment of being face to face with you.  In general a guy that finds it difficult to communicate verbally, will prefer written methods of communication.  Of course that will change when a relationship progresses and he becomes much more relaxed talking to you. 

Often what happens though when you communicate by these methods, is when you see each other face to face, you have nothing else to say, or you get a completely different perspective of what the person is like.  For example he might be joking all the time by MSN, when you meet him face to face he might be completely serious and quite nervous and cautious when he says something.

whenever he sees me he stares and cant stop smiling ..

You can't keep your eyes off someone or something you find attractive.  If he stares and smiles at you all the time, he must like the look of you.  I can't stare at women or anything that I don't find attractive for too long, all other guys are the same.

whenever i do see him i skip a heart beat lol.

Yes, those attraction nerves.  It sends blood rushing away from your stomach to other areas of your body that provide attraction to the opposite sex.  Like your lips which are essential for attraction.  So these nerves actually make you look even more attractive.

but i avoid eye contact and act as if he's a stranger,

One common thing that women do if they are attracted to a man (they probably don't notice it), they look at the guy, make eye contact for a few seconds, then look down, then look away.  In that order, it seems a natural, instinctive thing women do in the early stages of attraction. You can't exactly stare each other out, because this would be seen as an aggressive stance.  I don't think you really need to worry about this.  It is like your heart skipping a beat, it is a natural reaction of your body, just go with the flow of your body.

is his grinning just mocking me ????

I doubt it, I wouldn't grin at someone I was mocking that much.  In fact anyone I would consider mocking, I would try my best to avoid eye contact with.  Grinning can be nervousness, grinning can be "i don't know what to say, so I'll grin instead", grinning can be an invitation for you to come closer, grinning can be sign that he is happy to look at you.

im confused coz i believe it is.. then after that he emails me and asks how i am and stuff..

If he spends his time e-mailing you, why would he be mocking you?  Why would he be interested in how you are?  When you use MSN and send e-mails you can completely ignore someone.  With MSN you can block other users from seeing you online.  If I don't want to speak to a woman that is what I will do.  I wouldn't e-mail a woman asking how they are or try to engage in any conversation.  Avoidance is what blokes will do, if they are not interested.

i also get stares of his friends who wouldnt actually look at me normally.

That's his friends, they are nothing to do with your relationship with him.

It sounds as if you have got a shy guy here.  You both really need to be tackling your phobia of speaking to each other and being in close proximity to each other.  See this as a challenge, you need to get to know him, in real life, not just that online person that you chat to.  Only when you get to know him in real life, will you get to know whether you fancy him and whether there is a potential for a relationship.