accelerometer - Angle errors in IMU (using Accl & Gyro)

I am making Autonomous Quad. I am programming my IMU using ADXL335 -3 Axis analog Accelerometer & L3G4200D 3-axis digital Gyro. I am using ARM Cortex M4F based TI's stellaris launchpad LM4F120XL.

I've a problem while implementing IMU. Here is my algorithm of IMU...

By ADC I am getting reading of accelerometer in Dx, Dy & Dz. Now as I've 12bit ADC I am using the following formula to get the readings in "g"

Rx = [(Dx*(3.3/4095) - Tx] / 0.3
Ry = [(Dy*(3.3/4095) - Ty] / 0.3
Rz = [(Dz*(3.3/4095) - Tz] / 0.3

In stable condition I've checked the Tx, Ty, Tz:

Tx = 1.630820
Ty = 1.658477

Tz = 1.997728

For Gyro (at 250 dps with 8.75 mdps/digit)

To get reading in dps I am using following formula

X = Gx*8.75/1000
Y = Gy*8.75/1000
Z = Gz*8.75/1000

(Here Gx, Gy & Gz are data from gyro... I've checked them- they are signed values and also accurate (min. noise) )

I want to measure angles with respect to all axis (pitch, roll & yaw). For that I am doing as per following

Th = 5;
T = 0.05; // approx. 5ms I've checked it using counter
c = 180/3.14;

while (1) {
  // initial values of Rxe, Rye, Rze are same as Rx, Ry, Rz
  Xd = atan2(Rxe, sqrt( (Rze*Rze) + (Rye*Rye) ));
  Yd = atan2(Rye, sqrt( (Rze*Rze) + (Rxe*Rxe) ));
  Zd = atan2(Rze, sqrt( (Rye*Rye) + (Rxe*Rxe) ));


  // To calculate Xavg, Yavg, Zavg from two consecutive X, Y, Z values respectively
  gyro();

  if ((Xavg >= Th) || (Xavg <= Th)) {
    Xd = Xd + (Xavg*T);
  }
  if ((Yavg >= Th) || (Yavg <= Th)) {
    Yd = Yd + (Yavg*T);
  }
  if ((Zavg >= Th) || (Zavg <= Th)) {

    Zd = Zd + (Zavg*T);
  }

  Rxg = sin(Yd) / (sqrt(1 + ((cos(Yd) * cos(Yd)) * (tan(Xd) * tan(Xd)))));
  Ryg = sin(Xd) / (sqrt(1 + ((cos(Xd) * cos(Xd)) * (tan(Yd) * tan(Yd)))));
  Rzg = ((Rzg > 0) ? 1 : ((Rzg < 0) ? -1 : 1))*(sqrt(1 - (Rxg*Rxg)-(Ryg*Ryg)));

  get_accl_data();            // To get ADC values
  accelerometer();            // To convert ADC valuse in "g" - Rx, Ry, Rz


  Rxe = (Rx*0.015)+(Rxg*0.985);      // weighted average
  Rye = (Ry*0.015)+(Ryg*0.985);
  Rze = (Rz*0.015)+(Rzg*0.985);

  Xd *= c;     // converting in degree
  Yd *= c;
  Zd *= c;

  Print(Xd);
  Print(Xd);

  Print(Xd);

  Xd /*=c;    // converting in radians again
  Yd /*=c;
  Zd /*=c;
}

I am printing Xd, Yd, Zd... It is okay while satble or within +/- 10 degree... But for more than 10 degree I am just getting fault values. I mean It is informing whether the device is satable or not OR whether it is moving on positive side(counter clock wise) or negative side (clockwise) BUT not giving the exact +/- 40 degree output while it is actually on 40 angle with respect to ground!

What I am missing? Please help me ... I've done it by referring some docs and blogs.

// al variables type are taken proper (as per my knowledge).

One more question : Do I really need to know these angles? or can I use the current values also to make my quad stable ? What else data I'll require to make my quad stable?