Everyone on this thread may find this interesting.
I tried all of the troubleshooting in this thread and nothing worked. I figured it was just an iOS 8 bug that we'd have to wait to get fixed. However, my phone had previously developed a different hardware problem unrelated to this. When talking on the phone, I hear a beep in my ear as if the person on the other end was hitting a button on a touch tone phone by accident. Happens no matter who I am talking to, on the headset, speaker, Bluetooth, etc. I thought it was an iOS 7.1 bug so I waited for iOS 8 but it continued to happen after upgrading (in addition to the home button bug appearing when I upgraded).
I tried restoring my phone and the beeping problem still happened. So I went to the Apple Store and since my iPhone 5 (64 GB) was still within warranty, they replaced it. When I got home, I restored the new phone from the backup from the defective phone.
After applying all of my apps and settings from the defective phone, I figured for sure the new phone would have the same home button issue that the old phone had. In 24 hours of testing, I have yet to see the problem and I've tested it very thoroughly.
I now believe this isn't actually an iOS 8 bug but rather a home button issue with certain phones that iOS 8 exposed somehow. If you guys go to Apple with this, maybe you can get a replacement phone or a replacement home button. If enough of you report it to a Mac Genius at a store, maybe they will take notice. And if this is an issue that iOS 8 exposed, they really should cover this under warranty even if your phone isn't under warranty anymore.
Good luck everyone.
-Scott