This has been fixed in Lucid, at least partially.
Now the suspend key hibernates the laptop, regardless of the setting in power
manager. I will open a new bug for that.
** Changed in: xorg-server (Ubuntu)
Status: Incomplete => Fix Released
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[GM965/GL960] Pressing Suspend key turns off display instead of suspending
https://bugs.launchpad.net/bugs/410829
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