Are you OK with restoring? If you have jailbroken, I would recommend QuickPwning your device (its easy enough) or Pwning your device with WinPwn/PwnageTool again. Sometimes you have to restore to get rid of errors like this.
Steps:
Connect to iTunes and click Restore > Restore and Update. (This gets rid of a Pwn/Jailbreak, so thats why you have to do it again). If that fails:
Recovery Mode steps:
Hold Power and Home for 6 or so seconds until it turns off. DO NOT use the Slide to Power Off screen. Keep holding them until the Apple Logo appears then let go of the Power Button immediately. Keep holding the home button until the "Connect me to iTunes or Else..." screen shows up. Then restore. It should work.
P.S. If you can get to the Recovery Mode screen, you know your Home Button is not faulty. Because you can lock, the power button is working. After you restore, post back here with your progress. If you are still having problems, I will try and assist you more

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Cheers!