Did you try to toggle the "lock/unlock" button under Settings>General>Lock/Unlock?
EDIT: as odd as it sounds, it is usually a bad quality digitizer (outer glass) assembly. Get a good one from a reputable seller and it will be fixed.
The home button circuit is interfacing with a circuit built into the digitizer assembly. A bad quality or defective assembly will therefore cause the power ON/OFF button to stop working.