@Frido Thank you for the feedback.
FYI @sjunnesson, @bkize, @BDub @mohit
I just finished a build with GNU Tools Arm Embedded (4.8 2013q4) on Win 32 per the core-firmware and I get the read flash.
It is a PANIC out of heap! So the I suspect that CodeSoucery does a better job of coalescing
In release mode the IWDT (wtach dog) is cutting short the SOS and blink codes. 
In debug the output on tx,rx (3.3V) pin is a <PANIC> char* _sbrk(int) (139):Out Of Heap
0000000001:<DEBUG> int main() (103):Hello from Spark!
0000001994:<DEBUG> int Spark_Connect() (616):sparkSocket Now =-1
0000002000:<DEBUG> int Spark_Disconnect() (654):
0000002004:<DEBUG> set_socket_active_status (810):Sd=0, Status SOCKET_STATUS_ACTIVE
0000002012:<DEBUG> int Spark_Connect() (623):socketed sparkSocket=0
0000002018:<DEBUG> int Spark_Connect() (644):connect
0000002164:<DEBUG> int Spark_Connect() (646):connected connect=0
0000002306:<DEBUG> int Spark_Receive(unsigned char*, int) (366):bytes_received 40
0000002314:<PANIC> char* _sbrk(int) (139):Out Of Heap
Let me see what is causing it.