This is happening in 12.04!

Is this a regression? I can't remember having this problem before, but
it is very annoying when watching a movie or when using a usb keyboard
instead of the laptop keyboard. This should be a basic feature for every
modern OS!

In power settings, I have "do nothing" when lid is closed.

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Packages, which is subscribed to gnome-screensaver in Ubuntu.
https://bugs.launchpad.net/bugs/23220

Title:
  Closing lid should not turn off external LCD

Status in “gnome-screensaver” package in Ubuntu:
  Confirmed

Bug description:
  If you have a laptop with external monitor attached, and you close the laptop
  lid, the external screen should not blank. Idealy, to save power, heat, etc. 
the
  laptops screen would be shut off, but that's a bonus.

  A use case here: watching movies on a TV, you often want to close the laptop
  because it's distracting to have two versions of the movie playing.

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