Yes, Apple will fix this. It's usually that the magnet that pulls the latch down to let it lock in place doesn't function correctly. If it's under warranty, it's covered.
Basically there is a hook in the release button on the iBook where the latch from the display goes and catches on to lock the display down. The hook on the release button has broken on my girlfriends ibook, the only way to fix it is to get a new release button. It's really not that big of a deal since she is going to sell it to our local macreseller, her work just got her a G4 ibook.
Yes, as far as I can tell from all the powerbooks I have used, the latch can break on them as well.