I found, on a clean karmic install, that I had to do this:

# blank screen and lock on lid close
gconftool -s --type bool   /apps/gnome-power-manager/lock/blank_screen true
gconftool -s --type string /apps/gnome-power-manager/buttons/lid_battery blank
gconftool -s --type string /apps/gnome-power-manager/buttons/lid_ac blank

to get the laptop to work as desired.

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Does not lock screen on lid close
https://bugs.launchpad.net/bugs/428115
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