If I run xev, I see some activity when I press the sleep key:
MappingNotify event, serial 33, synthetic NO, window 0x0,
request MappingKeyboard, first_keycode 8, count 248
which seems to indicate that the event is making it as far as the X server. I think it's gnome-power-manager which is expected to receive the event and act on it, but that isn't happening.