Can you sleep it manually? Or is the issue with both, automatic and manual sleeping? Try repairing permissions with Disk Utility
Yes. I can make it sleep manually.
Have you rebooted? Repair permissions, it might help
I had to zap the PRAM and NVRAM to get mine to sleep. Probably related to the old hard drive I moved into the new machine.
http://support.apple.com/kb/ht1379