I have a HP NC4400 laptop and I'm experiencing the same problem on
Karmic Koala (kernel 2.6.31-3-generic).  After a cold boot
/proc/acpi/button/lid/C241/state always shows "open" no matter if the
lid switch is activated.  When the lid switch is activated the LCD
backlight does turn off but does not trigger the change of ACPI state.
Manual sleep from KDE power manager works as expected.

Strangely the workaround posted above corrects my problem.  After a cold
boot, doing a hibernate manually from KDE power manager and then waking
the machine causes the lid switch to start to work correctly.

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/proc/acpi/button/lid/*/state always says "open"
https://bugs.launchpad.net/bugs/89860
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