This is happening to me as well.  I have a  Compaq nc6320 laptop.  I was 
running ubuntu 7.04 and the system would suspend when the lid was closed.
I just reinstalled the system to ubuntu 7.10 over the weekend and now the 
system will not suspend when the lid is closed.  I can suspend by clicking the 
power button and choosing suspend, but not by closing the lid. 
I also ran lshal -m and closed the lid, no response was noticed.  I also 
checked the /proc/acpi/button/lid/C238/state and it shows open all the time.
I'm running hal 0.5.9.1 (the default that shipped with 7.10).
Output from uname -a is "Linux merlin 2.6.22-14-generic #1 SMP Sun Oct 14 
23:05:12 GMT 2007 i686 GNU/Linux"

Any suggestions cause this is rather frustrating that closing the lid
does not work right?

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lid button does not work
https://bugs.launchpad.net/bugs/155502
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