I solved my TouchSmart sleep problem.  My issue was that the computer would sometimes go to sleep properly and other times it would lock up and you would have to do a hard reboot.  When the computer locked up, the On-Off button on the top right would still be blue, not amber.

 I read a Microsoft KB article; 950686, and one of the things I tried was the Performance Information and Tools section.  It identified "A driver that was causing Windows to stand by or hibernate slowly" as having a problem.  The driver was USB Mass Storage Class Driver.  I'm not sure what it does; maybe it has something to do with the memory slot card reader, but I disabled it and my TouchSmart works perfectly now when it comes to sleeping.

 Hope this helps others.

 Chuck