Sathi haru,
                      I'm switching jobs here in the next month. The first three year term of my H1b expires in October of this year. When my new company does a transfer of my H1b, the USCIS will also extend my H1b until 2016, correct? Or does the company need to file an extension and a transfer as well.

Thanks,

Ask your lawyer to put a new three year date so that you dont have to extend again after few months from new employer. And you can always request those missing months back after you are close to 6 years of h1b.
In my case, we requested 3 years completely new rather than extending to October and reapplying for extension again after few months.

 transfer of my H1b = Applying exactly same just like the first time.