I just ried the foam-fix with a DIY foam-frame.
It worked perfect on an iPhone we already assumed to be lost.
My guess:
If the light sensor gets too much light, it doesn't work (o'really :).
But where does it get the light from, when you cover the front?
From the backlight!
The light from the lcd panel diffuses into the light sensor.
So if you take a little bit foam to make a frame around the sensor - just like the thing on eBay linked above
http://tinyurl.com/6w7uutc
this problem is solved.
Wow.