Hello,
I have the same issue with iPhone 6. It was working fine under 9.X and on the first or second release of 10.x. Two or three days ago the issue has started and if I remember correctly my last iOS update was more than a week ago. As already mentioned iOS 9.3.5 is no longer signed. In the last two days I have tested all 10.x builds (iPhone_4.7_10.1_14B72_Restore, iPhone_4.7_10.1.1_14B100_Restore, 10.1.1 Build 150 (I believe that I was with this one initially) and the public beta 10.2 beta 3). The issue exists with all of these versions. Also re-calibrating the button doesn't work. My phone is still in warranty and I'll bring it to the local telecom for fix/replacement in the next few days. Hopefully Apple will fix this in the final version of iOS 10.2.
Basically I have nevers used the iTouch functionality, so it is not a big deal for me. What worries me is that this issue somehow impacts the performance of the battery. Now my battery drains too fast. It gets from 100% (fully charged phone) to 0% (no battery) in about five hours. And this happens with Location services and Cellular data turned off, with activated battery save mode. In the battery consumption report there were no applications listed with abnormal usage. In my opinion there is kind of incompatibility between the hardware and the software. Talked to some friends with iPhone6s - no such issues there.
Thanks,
Nedko.