I looked all over for this for the past two weeks and finally found the following:

http://communities.vmware.com/thread/108796

SOLVED

Please open the following file: /etc/init.d/mountdevsubfs.sh by following command - gksudo gedit /etc/init.d/mountdevsubfs.sh

Find the following lines:
#mkdir -p /dev/bus/usb/.usbfs
#domount usbfs "" /dev/bus/usb/.usbfs -obusmode=0700,devmode=0600,listmode=0644
#ln -s .usbfs/devices /dev/bus/usb/devices
#mount --rbind /dev/bus/usb /proc/bus/usb

Unmark them so that look like this:
mkdir -p /dev/bus/usb/.usbfs
domount usbfs "" /dev/bus/usb/.usbfs -obusmode=0700,devmode=0600,listmode=0644
ln -s .usbfs/devices /dev/bus/usb/devices
mount --rbind /dev/bus/usb /proc/bus/usb

Restart and your usb devices will be recognised