Well it has been solved for me. Here is what i did.
1. Switch off wifi and Bluetooth using hardware switch.
2. Start up ubuntu one from the menu (Applications > Internet > Ubuntu One).
3. After the exclaimation mark comes up in the panel icon then start wifi and 
BT using hardware switch.
4. After successful establishment of wifi connectivity to router then click on 
panel icon of ubuntu one and click connect.
5. Works!

Once said sequence is done, the connection happens as usual everytime
during and across many power cycles.

Thanks for your inputs.

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BadTransition: SYS_SERVER_RESCAN_DONE
https://bugs.launchpad.net/bugs/458393
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