I don't really understand the issue here. This behavior seems absolutely
fine to me. Why would a laptop disrespect power settings and suspend on
its own? If the power-settings is set to "do-nothing" then it simply
makes the display blank and lock the screen; if it is set to suspend
then only it should suspend....as shown in the image
http://i.imgur.com/0ebQv9W.png.

If it doesn't suspend even after setting it suspend, then it is a bug.
We must not temper anything in /etc/systemd/logind.conf.

All previous version had this bug that it used to suspend regardless of
the settings which was fixed in xenial.

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Touch seeded packages, which is subscribed to systemd in Ubuntu.
https://bugs.launchpad.net/bugs/1574120

Title:
  Notebook doesn't suspend when lid is closed after update to 16.04

Status in systemd package in Ubuntu:
  Confirmed

Bug description:
  My notebook does not suspend after upgrading from 15.10 to 16.04.

  According to system settings the notebook should suspend when lid is
  closed but actually this does not happen. Instead it continues to run
  as if nothing had happened.

  With the previous versions of ubuntu (14.04-15.10) everything worked
  fine.

  My System: HP Pavilion dv7.

  ProblemType: Bug
  DistroRelease: Ubuntu 16.04
  Package: acpi (not installed)
  ProcVersionSignature: Ubuntu 4.4.0-21.37-generic 4.4.6
  Uname: Linux 4.4.0-21-generic x86_64
  ApportVersion: 2.20.1-0ubuntu2
  Architecture: amd64
  CurrentDesktop: Unity
  Date: Sat Apr 23 23:11:15 2016
  InstallationDate: Installed on 2015-10-29 (176 days ago)
  InstallationMedia: Ubuntu 15.10 "Wily Werewolf" - Release amd64 (20151021)
  SourcePackage: acpi
  UpgradeStatus: Upgraded to xenial on 2016-04-22 (1 days ago)

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