Shame that this never got solved as this glitch still plagues many GPD my own including.
I'll add my two cents here for people still hoping for a fix.
1. It's definitely a software issue, the recent and home buttons are still responsive, as they still prevent gpd going into sleep mode when pressed, also if you press and hold the recent button on the main screen it will activate the menu to switch widgets and wallpapers.
2. A quick fix for this is a hard reset, turn on your gpd, wait for it to load up, when it's done press and hold the power button for about 10 seconds, or until your gpd shuts off, turn it back on and it should work fine, this method works for me.