With Ubuntu 16.04 laptop doesn't suspend when lid is closed

I stumbled across an answer that seems to have worked. Too bad there is not a cleaner way to do this than to alter the default settings. Would rather the System Settings|Power setting worked.

I edited the file '/etc/systemd/logind.conf'

sudo vi /etc/systemd/logind.conf

Then I uncommented the line (removed the beginning #) containing 'HandleLidSwitchDocked=ignore' and changed the value to be:

HandleLidSwitchDocked=suspend

After a reboot all seems to be working as expected, though I'm still prompted to login twice. (Once to unlock, and again as a user of the OS.)

I had a similar problem. There is apparently a bug in the 4.4.0 kernel. The problem can be solved when you install the new kernel 4.4.8.

You can find instructions to do it here: http://linuxdaddy.com/blog/install-kernel-4-4-on-ubuntu/

Works perfect for me.