If you go to Google and enter 'iPhone (or iPod touch) home button not working', 'home button stuck', you can see that you're not alone.
While there are various methods of trying to solve the problem, say doing a calibration, reactivation of home button or whatever, they all seem to work at first but after a period of time they won't and they are just more or less a placebo effect.
Home button not working is basically a hardwere problem. Usually there is some dirt between the button and the contact. You may try pressing the home button firmly and try to turn it clockwise and anticlockwise with your fingertip. Do this several times and probably your problem is solved.
If your device is still under warranty (AppleCare), go to get a replacement unit.
I hope Apple will improve the next generation iPhone/iPod touch/iPad's home button and make it better as it's the key button on those iOS devices.
I tried other tips but keeping phone on flat surface and holding Home button and turning it clockwise and anticlockwise worked for me. Actually it starts working even before just one turn.
(Or you can hold it horizontally, turn around while holding home button LOL).
But it still goes back to unresponsive after some time and I have to do it again!! :-(
My guess is somehow this kind of recalibration is fixing the response of Home button.
"IT IS A SOFTWARE ISSUE"!!!
Hey, My home button would not work either and noticed it would work on and off sometimes. Finally I realized that it would work on and off after I plugged it in to charge.
So I figured out how to make it work without any reset. It is VERY simple:
1. Plug in you phone with the provided charging connector. (doesn’t matter if it is plugged in to a power source, the connector is going to be used simply as a tool)
2. Use slight force to push the connector a little deeper into the phone. The point is to slightly shift the hardware under the home button.
3. Keep pushing the connector into the phone and or wiggling it until the home button works again. Then carefully and slowly unplug your phone.
I realized that the home button must shift out of position for some reason. By using the connector, you can push the hardware back into place. That is prop why resynching helps. Thats because you have to plug in the phone causing the hardware to shift. I’m no engineer, but it makes sense to me, most importantly, it works!
the tip by @krypticknowledge to use the cable connector to physically push up underneath around the area where the home button is inside the iphone, that works but that didn't last long for me. but that tip is really on the right path towards fixing this problem for me because my guess is that the button's insides, or the area behind the button, are being pushed back into the phone over time and as a result then the button stops working properly because the connection is too far back. a logical extension of that tip is to constantly provide some sort of support somewhere behind the button. and so, found a tip from yojo619 over on youtube: http://www.youtube.com/watch?v=PpkcY4WE8pA
the idea is to put a really thin piece of plastic back there underneath the glass back of the iphone to support the bottom middle area behind where the button would be. the plastic could be cut from retail packaging. but be sure that it is really thin because you will have to fold it in half and put it in the phone and then you screw the back on and you don't want any gaps (if the plastic is too thick) when you screw the back in place. cut a small piece of that plastic, fold it in half, put it in. the fold is to provide a little bit of pressure (kind of like to act as a spring) to support the area behind where the button is. but, of course, you could try putting an unfolded piece of plastic to see if that is enough to push the button back into place to see if that works.
did this folded-plastic hack for my iphone when had to replace the scuffed camera lens on the back of the iphone and the button now seems more sturdy. for my iphone, tried the hold-home-button-down-with-the-shutdown-slide-on-in-an-app trick and the turning-the-home-button-with-alcohol-to-try-to-clean-it trick but those were temporary fixes for me. the pushing up with the cable connector makes more sense to me because you do see it working when you push it up from the inside to make the button work. the tiny folded plastic hack provides a more constant permanent fix that works for me without having to go to the trouble of replacing the button.
Just wanted to update on my findings with having the same issue. I ended up purchasing a new button off of Ebay for $5. When I took the phone apart there was no dust, its a 4 not a 4s and i carry it in my pocket, so I do not belive that dust was the issue,
However if you look at the way the ribbon cable is designed and sits in the phone, it is flexed causing extra tension to be put on the cable and my cable actually appeared to be cracked. I have had the new button in for over a week not and have not had the issue return at all.
I belive this, that the ribbon cable was cracked causing a poor connection sometimes working and sometimes not, which leads me to belive that all of the ways to re-align the button just put the right type of pressure on the ribbon for a temporary "good" connection only to become faulty again.
I wish I would have taken pictures but this is just my observation and opinion. Anyway the new button works like a charm!