My job contract at client site was just terminated prematurely by client on October 1, 2010.

My first H1B (2007 -2010) was valid till September 29, 2010.
My extension H1B was filed by another employer (consulting company) on April 29, 2010. I got RFE in June and my employer responded in June 30 with docs. Since June 30, my status still shows "Pending".

Am I still "in Status? My employer is suggesting me to exit USA by next week, for vacation in India, and if it gets approved in interim he would send me the H1B approval notice. Else he would cancel my H1B if I stay in USA. He gave me 2 options: either go to India OR change to F1 visa status. Please let me know consequences of each and what are best options and suggestions? Legally how many days can I stay in US?