Well, it could possibly be software-related, but I doubt it. It sounds more mechanical. If you look over it carefully, you should come across a small switch or button near where the folding joint is. It could be very tiny, or it could be pretty obvious. Many laptops have some sort of small pin that gets pushed down when the lid is closed. I don't know if iBooks use this or anything similar, but I'm sure if you look carefully, you'll find something of the sort. You might have to take it apart to find a switch. (The Sony Vaio I'm using right now doesn't have one on the outside, but there has to be one inside somewhere. I think mine is by the latch that holds it shut, but I've never opened it up to look.) I'd imagine this part is what's causing you the problems. It could have become stuck when it fell, or it might have broken completely. If you can find that switch, you should be able to fix it.
EDIT> If it's still under a warranty that covers something like that, I'd just get it fixed by a pro. Better safe than sorry. If not, expect to pay a few thousand dollars for it to be fixed.