I spoke to OtterBox customer support this morning and they confirmed that the sleep/wake function does not work on this case. They did mention that they are in the process of making a new cover that will work and will ship it out free automatically to anyone who ordered the case from them. I'm still going to return mine, though. Between the sleep/wake function not working right away and the sub-par screen protector I'd rather just use something else.
Weird I ordered mine Saturday and it arrived here today and my sleep/wake function works perfect. Guess they fixed it that fast.