I"m having this problem myself. This is the 2nd time it's happened to me. The first time it was shortly after 4.2, then after about a month it started working out of nowhere and was perfectly fine until shortly after 5.0. My guess is it started working after some google app got a update and now after 5.0 it (well now I"m on 5.1.1) the issue is back. I"m not sure what app might be causing it, but I think it's likely a system app that you can't uninstall.
I still can't imagine it's only a hardware issue, as I had the same problem when 4.2 released then it fixed itself and worked flawlessly for months until 5.0. Generally hardware malfunctions don't typically repair themselves after system and app updates.
Also I tried the glitch posted here to get the red lights etc.. I did get the red light and rebooted after. It didn't seem to work, one unexpected thing did happen after I tried a second time. The phone booted into the optimizing apps screen 1 of 105, like it does after a system update. However I've had no update. Not sure why that happened.