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It's one of those cliche things that people say when they don't feel you're in their best interest any longer, a better prospect has come up, or they don't think you're worth the time. Like 'let's just be friends for now'. It's a 'nice' way to be a jerk, mostly.
If people aren't interested, I don't get why they can't say 'I'm not interested' or 'Its too soon after my last relationship, I still have unresolved feelings/issues with my ex that I need to deal with'. Infinitely more clear than 'I'm emotionally unavailable'. People are going to be upset no matter what you say; might as well be sincere instead of insulting their intelligence by waxing sincere. Fake sincerety does little but bludgeon people with the fact that you don't have enough respect for them to be frank about things and have a real discussion about emotion.
People are wonderful that way.