iPhone 4 Proximity Sensor Problems - insight & cause

Oftentimes when budding repair technicians replace the screen on an iPhone 4, they receive this common complaint. My phone works weird after you finished. It hangs up on people.
A little background - one of the few things the iPhone does right, in my opinion, is handle turning the screen off. It is more elegant than what I have experienced on my Android smartphones. There is a sensor at the top of the phone, situated on the power button flex cable. It senses light. When two things are true - a phone call is in progress, and this sensor sees no light, the screen goes off.
The problem with this approach is that the LCD itself creates light that it emits from all sides, which can leak into the sensor. For this reason, there is a piece of foam that goes around the sensor. This foam prevents the light from the LCD from leaking into the proximity sensor.
This foam piece is often accidentally discarded during repair, which means the phone's screen will stay on all the time - even when it is in the middle of a call right next to your face!
On the iPhone 4, this foam sticks to the phone, so it does not cause much issue. On the iPhone 4S, this piece sticks to the screen, so it is often discarded when technicians perform phone repairs.
Before performing your repair, keep this in mind. Make sure the proximity sensor always has its piece around it. Don't scrape it off thinking it is dirt while removing adhesive that has shards of glass stuck in it. Don't throw away the old screen until the repair is confirmed to have been completed successfully.