Unresponsive home button - software or hardware issue?

I used to think it was a hardware issue. My new ipad developed this problem about 3 months after purchase. I couldn't send it back for a replacement because I had dropped it once and there were some minor dents. I lived with it, used the accessibility options to simulate a soft home button.

When I updated to OS6 on launch day, the problem disappeared. The home button became as good as new. Now though, about a week in I can feel it is degrading again. Response is slightly delayed, and I suspect it will go to fully unresponsive eventually.

So does anyone know if the problem is a software issue? Seems like it from what I experienced.