I had the ipad2 set to mute.
I was in the general settings and clicked on Lock Rotation. I then clicked on Mute. My screen is now permanentally locked and I can use the mute button option. You must go back to Lock Rotation with the Mute button set to sound in order to unlock rotation. Then go back to using Mute and your screen should rotate just fine again. I think apple needs to allow for lock and mute at the same time, or better yet keep the same support but tell the end user that it exists by offering a lock and mute combo button.