Apple just replaced one of my two 3rd generation iPads, due to a temperamental home button, with about a week remaining in the one-year warranty. While I always purchase AppleCare on my computers and iPhones, I generally don't get AppleCare for my iPads. I buy at least one new iPad per year, and they aren't subjected to the the same heavy-duty workload as my iPhone or MacBook Pro.
Every iPad or iPhone I've replaced under warranty/AppleCare was failing due to moving parts; often the home button, sometimes the lock button. Despite the introduction of "multitasking gestures" in iOS 5, tapping the home button remains the easiest way to quit an app. For me, the opposite is true for accessing the list of recently used apps, where a four-finger swipe is more reliable instead of attempting to double-tap the home button.
I'd like to think that Apple could simply refine their gestures and abolish the home button, but I expect there are a substantial percentage of iPad users who will never be comfortable with mutli-touch gestures as a substitute for a hardware button. The home button is for the iPad, what the single-button mouse was for the Mac.