Well to add more confusion to the mix....I have noticed something over the past couple of days that indicates it may not be a hardware issue. For the past two mornings I have pressed the home button but the unlock screen did not appear. However, the lights were off in the room when I pressed the button, and each time I noticed the screen backlight turn on (albeit with a black colour) and then turn off again. So the phone registered the home button press, but didn't go to the unlock screen. Next press it went straight there.
I'm really hoping iOS4.2 will fix this issue!