I was assuming that the netcdf layer was a regular grid and it's not. So coordinate system + transformation is required (thanks to Spacedman at gis.stackexchange.com)
Data provider confirmed EASE coordinate system - EPSG code 3410
The post that helped me with this from Spacedman at https://gis.stackexchange.com/questions/48518/how-to-re-project-ease-equal-area-scalable-earth-grid-with-a-25-km-cylindrica
Now the following seems to work...
library(ncdf)
library(raster)
library(maptools)
source("http://dl.dropboxusercontent.com/u/3394649/R_libs/ConversionFunctions.R") #Thanks to Spacedman at https://gis.stackexchange.com/questions/48518/how-to-re-project-ease-equal-area-scalable-earth-grid-with-a-25-km-cylindrica
data(wrld_simpl)
varRaster <- ConvertGrid("SMOS_File.nc", "Soil_Moisture")
varRaster[varRaster < 0 ] <- NA
varRaster <- TransformTo(varRaster)
#With Plot
plot(varRaster)
plot(wrld_simpl, add = TRUE)
#Now with 'image'
image(varRaster, useRaster=TRUE)
plot(wrld_simpl, add = TRUE)
Thanks for the help...
Guillermo