Yes – homepage looks fine now. Though, there’s one image on the featured slider that looks stretched (again, picking the full sized image instead of thumbnail version).
I had to run the regenerate thumbnails plugin multiple times. Each time, the problem would get partially fixed (some images started appearing right, but some continue to pose problems). Till today, I’ve run the plugin about 5 times! Not sure what is the significance of this behavior? Also, not comfortable knowing that I still do not know what the problem was!