It must have been a patch or hotfix that Windows Update installed recently (or the fact that it detected my Windows 7 Ultimate install's multimedia sharing capabilities), but my wife's laptop with Vista Home would never go to "Sleep" (aka suspend mode) when the lid was closed or the "Sleep" option was chosen from the Shutdown prompt. If you choose the sleep option, it would just wait a couple of seconds, jump to a login prompt but never actually get to the Shutdown/Sleep sequence. The fix was as per:
It was something to do with the "Multimedia Sharing Options" which stop the machine from going to sleep:
To fix the issue, do this:
Control Panel -> Power Options -> If "High Performance" is selected, choose something else, like "Balanced" -> Change plan settings (for the chosen power plan) -> Change advanced power settings -> Scroll down to Multimedia settings -> When Sharing Media -> Set all options to "Allow the computer to sleep".
The machine now sleeps when the lid is closed and boots up when opened (as before). A suggestion to MS would be to show a message in the Windows messagebar explaining why the machine was prevented from going to sleep rather than just flat out refusing to respond to "Sleep" requests.