I have started to read from Sakurai's modern QM.At very first,he refers to two state systems in context of Stern Gerlach experiment.Indeed he says that this system is a two state system.Can anyone please tell me what is meant by a two state system?

I think it means that the system can be in either of two states, or in some mixture of those two states in quantum case.

In the SG experiment, the system is either in a "spin up" or "spin down" state, or some superposition of the two. Hence, a two-state system.

study that book carefully---it is very good:)

It is more clear now...
Yes I agree that the book is very good.