Thanks Rantom, did this several months ago. Two updates since then and still there.

Let me put down the solution that works for me. If you use a bluetooth headset to listen to music, this may be relevant to you all.

The exact problem of cell-phone going into play mode right after a missed/dropped call is when:
1. You have the music widget set up.
2. The last pause you did was using your bluetooth and NOT the widget button on the screen.

What works for me is to always pause the music from the screen and not the bluetooth remote when I am done listening to the music. Great if few people can try and report. Cheers!

~aiyush