Hopefully this will help someone. I have a Vaio VGN-FE21S laptop but this is likely to apply to other machines.
I had the problem widely reported under Vista (note I have SP1 RC2 installed) with the screen going blank and the machine sleeping when closing the lid, even with the relevant Vista power settings set for this not to happen. The BIOS update avilable on the sony support site resolves this problem. However, when you try and run the BIOS update it may say 'Cannot read system settings' or similar. To get round this, extract the exe file using something like 7-ZIP (open-source zip compression utility). From within the extracted folder, you can run the Phoenix BIOS flashing utility manually.
This worked for me and I no longer have the lid closing problem.
