What nick said - plus, if you are using sensorless motors, the "unused" lead(s) become the sensor. Longer leads mean more transmission from the lead(s) powering up or down, and more unwanted pickup on the rest. Depending on design, this is rarely a good thing.
On the battery side of things, you have to remember that resistance increases with length, a longer power wire also needs to be thicker to get the resistance back down where it is needed. At high currents, the voltage dropped by the line might be difficult to measure using a meter. The internal circuits of the electronic bits, depending as they do on getting precise timing information from a rising voltage and comparing it with a reference derived from the supply, can and do notice these minute variations. The provision of a bank of high value capacitors at the power input of the ESC mitigates this in a simple installation. In a more complex installation, the variation in the voltage of the ground line will have all sorts of interesting side effects.
Then theres the question of how good the joints are.