Bad (dead) yeast? What now?

Yeast activity will lag longer than a day if the cell count is low. For a 5gal batch, one pouch is generally considered a medium-to-low cell count. Some people just buy 2 pouches, other people make their own starter...

You are shooting for the pitch yeast to reproduce about 3 generations before reaching the population levels where fermentation really gets going - you can mess with pitch calculators, but you can also do it by feel as well via making a starter. A starter has the added benefit of being able to verify the yeast is active & healthy, and free of contaminants. Pitching rate this isn't a huge deal: you still get beer. But the lag time affects yeast metabolism, and thus the flavour biochemistry of the beer.

One other tip: in any case you really want have your yeast population healthy and ready to go a day BEFORE brew day. So either make the starter about 3 days before you brew, or pop those yeast pouches ~24 hours or more ahead of time.

Using the yeast cake from a previous batch will work if done quickly & cleanly, but it's better to understand yeast washing, nutrition, and viability if you're planning to do this repetitively.

Your final gravity could be low due to high yeast attenuation, but it's also possible that this is related to the mash, grain or extract used, fermentation temperature, etc.

While it may just be taking its time to start up, I would say you should pitch another batch (or two, depending) of yeast. The amount will depend on whether or not you used a starter for your yeast. I'm guessing you did not, and if you are brewing a 1.060 gravity 5 gallon ESB, Mr. Malty's yeast pitching calculator tells me you needed 2.1 batches without a starter.

In my personal opinion, overpitching yeast carries significantly fewer negative consequences than under-pitching, especially for beginning brewers. It may be best to just assume that pack was a waste, count it as the 0.1 in 2.1 packs from above, and go pick up two more to pitch as soon as possible.

Also, during this time, limit the batch's exposure to open air. A delayed primary fermentation is the most risky time for infection. Finally, purchase yourself a cheap starter plate (or make your own). Slap the pack, make your starter, and pitch it the night before you brew, letting it get built up and ready to go, to pitch the day of brewing. An advantage of using a stir plate is you will more likely see a small krausen building up while stirring, telling you it's healthy. Plus you get to save on buying multiple packs of yeast since the stirring will help tremendously with increasing the cell count.

If you really want to get technical in understanding not only how under and over-pitching yeast can effect your fermentation, and how to ensure you are pitching the proper amount, there is a post on HBT that is very informative.

Hope it works out for you!

You're simply being impatient. It's not at all uncommon for it to take that long for yeast to start. Be patient for another 24 hours and you should see fermentation. Although you say you made a starter, your timeline is so short that your starter wouldn't have had time to do much.

The bag should puff up a little, but as it says on the back, it does not have to puff up all the way to be working. As Denny said, patience grasshopper.

If you want super fast starts then re-pitch some of the yeast cake from the primary of the last batch. That takes off like a rocket. And if you're buying the nice, but expensive, wyeasts, then it makes sense to get a few brews from it.