iMac is not coming back from sleep ever since I installed OS X Lion.

Hi there! I don’t have a very god evening, since last few evenings. What happened is, in my attempt to upgrade with the technology, I happened to install Lion on my iMac which has an Intel core 2 Duo processor which have been working nothing less than perfect. But even since I took thus decision, I came to me as a bad luck to my system. What exactly happens is that whenever I try to wake my PC from sleep, it refuses to do so and it doesn’t ever wake up instead all my devices like the keyboard, the track pad or magic mouse all of them just suck big time.

Until now, I have not changed any of the settings by any chance. Forget hardware, not even software ones except for this Operating System upgrade which has failed miserably in the attempt.

All that I can and I do when there is no change after this sleep state is to shut the PC down and then restart it by pressing and holding the power button down for seconds which can and does force the system to shut down.

Ok! This looks like a very weird problem because I and many of my friends have upgraded to Lion and some with the similar configuration you mentioned. It is weird, but not as weird as to not get solved at all. If I am taking this pain of opening this post, that means that I have a potential solution to your post right?
Talking about the solution that you are very desperately looking for, I would ask you to simply go ahead with the task of resetting the PRAM. PRAMs are nothing but Mac OS’s system and device settings that should be accessible to the OS in the quickest and easiest way possible. The exact details of storages that happen in PRAM are totally different in different systems. However some common inclusions are as follows:

• It includes about the display and video setting applied in the system which includes: refresh rate, screen resolution, number of colors
• It also includes details of the startup audio. Basically details pertaining to the volume of the startup music or audio
• It also includes default volume of the speaker before the startup
• If there have been any recent kernel panic as such, those details are also included
• It also holds details of the region of the DVD like, if it’s full or empty and all. It is a very important setting again

However, we are interested in the resetting of PRAM, whose steps are as follows:

1. Start with shutting your computer down and turning it off completely.
2. Try and locate the following keys on the keyboard viz; Command, Option, P and R.
3. Turn the computer on after locating the above mentioned keys
4. Press and hold these keys which are Command, Option, P, and R keys. Press them before the gray screen even appears
5. Keep them pressed and hold it in that very position till the computer decides to reboot and leaves its trademark startup beep
6. After that, you need to release the keys that you were holding till now

This resets your PRAM and even the Non-Volatile RAMA is set to default again. There might also be changes resulting into a reset to default date on certain models

I have had the same problem and I have managed to clear it out without the use of the above instructions. This does not imply that the above solution is worthless and I do not intend to offend anyone. But I just wish to post the solution that I discovered for the issue only with an aim of helping those in need. I happened to resolve my issue using the System Management Controller (SMC) it is also called Power Management Unit following the below mentioned steps and instructions:
Before you go ahead with the resetting process, I would ask you to follow the below given steps.

- In order to force quit all the applications which are responding you need to press Command + Option +Escape
- Go to the upper-left menu bar to find the Apple menu, choose Sleep from there and put your system to sleep.
- Restart your system by going to the upper-left menu bar to find the Apple menu and pressing the restart button
- Again from the same Apple menu, chose the Shut down button in order to shut your PC down

If even after this, you PC just stops responding but keeps running normal, you need to forcefully shut the machine down by pressing and holding the Power Button for 10 seconds. Please note that, if there exists any unsaved data in any open application, they will be lost.

In order to find out if the resetting is actually necessary, you will need to perform the below given checks:

- You will have to try unplugging the MagSafe adapter for a few seconds from both the Mac PC and the power socket
- After confirming that the PC is completely shut down and there is no power supply in the system, actually remove the battery and put it back and start the Mac.

In case you happen to realize the issue is still not resolved after following the troubleshooting mentioned above, an SMC reset looks unavoidable
Still, if the following conditions are true in your case, you can confirm that the SMC reset is necessary for your system

- Fans:

o The fans installed in your system, run at an unusual high speed which looks and sounds different without much diagnosis

- Lights

o If you notice that the keyboard backlight is not behaving as it is supposed to be.
o Even the status indicator lights, apart from battery indicator and display backlight all behave unusually weird.

- Power

o Even when the computer’s power button is pressed, it doesn’t respond at all.
o It doesn’t wish to respond when you happen to close or open the lid in case of a portable Mac.
o There is an unexpected and high number of shut downs and sleeps which leads to unbelievable troubles
o There is no proper charge in the battery and sometime the system refuses to respond to the charger
o Activities In the system is not tracked and indicated correctly by the MagSafe power adaptor LED.

- System Performance

o The CPU utilization is moderately low, still the system seems to run unexpectedly slow.

- Video:

o There is no desired and expected switches between target display mode by a computer which supports target display mode
o There is unexpected and unwanted switches between target display mode by a computer which supports target display mode