true, I know simonk has a problem with certain motors. But I didn't hear (read 'know') that pancake motors were one among them. NTM/RcTimer/Equiv 2826 size motors (1000/1200kv) had this problem of timing.
But the latest 09-30-2012 release of simonK fixes this issue.
I guess you bought pre-flashed ESCs from abusemark... when did you buy them? Before september?

Vineet, can you please post me the procedure videos of flashing the ECS's along with what's required (flashing tools/ hardware).  I think I need to sort this out soon. cant sleep until it find out what really went wrong.

Umm, I wonder if any video-tuts exist.. But Dharmik bro's blog rcsci.blogspot.in is apt to do the job. Explanation is clear and upto the point.
You just need the hobbyking/equiv programmer, and some wires.

EDIT: found this:

www.youtube.com/watch?v=NZsT0agRZMY

Thanks,  I'll have to keep these tools handy now.  and prolly a couple-o spare esc's.  Have to do it secretly without my W__E knowing about it. Have promised not to buy more stuff for some time.

Yeah, you'll also need LazyZero flash tool and USBasp drivers (www.fischl.de/usbasp/)

Dharmik bha's tutorials seem apt.  I'll have to start collecting the $$ now.  Thanks Man!

@lastRites bro i am using F-20A ESCs from past few months. They are really good and as Satya bro said you can use them without flashing. They have so many functions but first 4 A-A-A-A beeps are for throttle range. I saw your video and your quad flies really good. If you are using kk4.7 fw you have to bring yaw pot to zero and throttle stick to the max to enter into the ESC programming mode, one more good function is you can restore everything to the factory defaults. You can reduce I gain to and quad will return to its initial position.

AUW is around 850gms. The escs are not entering the programming mode somehow..

Can you access programming mode with RX only?

No. I will use a different tx rx next time..

Which esc's are you using?  Flashed or non-flahsed?  Try and get  a programming card,  makes your life easier.  
In any case if the problem is with not enough thrust, then I would recommend to get a slightly bigger prop from the existing one of course at the cost of draining the battery faster.  In the game of quads you just have to keep tyring out various combinations to get that perfect flying experience.
Where did you buy those motors from?  If you have imported them it's always a good practice to buy some extra just in case you have a "dead-on-arrival" situation.  If you have bought them from a local hobbyshop take it to them for a test.

All from hobbyking. I am now thinking that the esc is the culprit as I found nothing mechanically wrong with the motor.

Is "lack of enough thrust" your main problem?

It was, but I overproped it to 10x6. All the flying in the video was done at maximum 60% throttle.

so what's the problem u are facing now?

I am grounded at the moment. No props.. I tried with 7x4 props but at full throttle it does not leave the ground. I have noticed that the rouge motor/esc spools up much faster than the other three.

Can you please confirm if One motor + esc combination works fine when you throttle them up.  Do this test for all the 4 motors and see if they all work fine as you wish them to.  Then we can address the next issue.

Seems to. But still cannot program the escs..

I programmed the escs. I changed the motors around. Still the same problem. The Rear-Right motor always spools up MUCH faster(20% more than the others approx). So this might be a software problem after all. I am using XXcontrol_KR_XCopter_v2_9 firmware. I did a lot of reading up on this firmware but am yet to find a solution. I have to apply about a 30% subtrim and full trim to make it take off. Hovering is impossible!