Okay, I have updated the original post.
I use cgminer 3.4.0. Have removed the USB extension cable, plugged in the USB directly, without cooling. Lets see what happens:)
I had the cooler added to the original heatsink, but removed it for now.
That cgminer is still at least 2 versions behind
but with that version you don't use the command line options you were running. but I cant say if they were an issue.
as for cooling. can you use a fan to blow some air across the stick to cool it a little.
and as per above. are you plugged into a hub or direct to a PC or something?