There is a potential workaround for this issue.

In GConf (using gconf-editor, for example) set the key

/apps/gnome-power-manager/buttons/lid_ac

to the value 'nothing' without single quotes.

Still, there should be a GUI option for this. The functionality is there
and seems to work for me, I don't understand why this would be removed.

-- 
[Regression] No "do nothing" for laptop lid closed action
https://bugs.launchpad.net/bugs/416236
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