Is the button jammed, or is there a noticeable 'click' when you press it?
If it isn't pressing in, you might have a gap between the front and back pieces of the casing. Take a look around and push any gap in the casing together; you'll hear/feel a 'click'.
If that doesn't work, you may have to open up the kindle and look at the contacts where the button sits. If they look like they're touching when pressed, you might need to replace the button's flex cable.
Otherwise, you could try purchasing an auto wake case. Wouldn't fix the problem, but would be a more convenient method than having to plug it into a PC.