I have an HP 510 laptop with Ubuntu 12.04.
I have all the correct settings for suspending when the lid is closed, as far as I can tell, so I think it's a problem with detecting the event.
The way it "should" be detected, from what I can see, is a little hardware switch that is pushed when the lid closes. This switch manually puts off the backlight, and sends the suspend signal. All I can think is that the signal isn't being properly interpreted.

Can anyone suggest a fix?

Update:
I tested whether the button was actually working based on the suggestion by josinalvo, and I found that in the directory /proc/acpi/button/lid/ there is no LID directory. There is, however, a C1CF folder, and in it is a state file. When using the this file instead of ID, I discovered that, no, when I close the lid, the state does not change.