Sorry for being too late to post a reply.
It feels so bad that so many people are facing this issue after investing their hard earned money and getting a faulty device. I did get many E-Mails regarding the same. And I tried to help each and everyone of them as much as I could.
Do not panic, it is just a piece of technology, and I guess you should be able to get a replacement easily.
I'm not sure what is the replacement duration for the phones purchased from the dealer. But normally, online shopping websites provide you 30 days of replacement or money back.
So, this is for the guys who faced issues regarding the Power Button/Volume Rockers. When I faced this issue, my phone was just a few days old.
What steps did I take? And what steps should you take? If ever you got a phone from Online Shopping websites like E-Bay, Flipkart, etc., you should immediately call them and let them know that you have got a faulty device. In most of the cases they will surely replace it. They do have a 30 days replacement policy. If you face this issue after 30 days of the purchase, then all you can do is take it to the service center and tell them to replace, if they refuse, getting it repaired is the only choice you have. Head to the nearest HTC Service Center. (Which I hate)
Now, if you have purchased the device from a dealer, shop, get to the Service Center as soon as your hardware buttons start acting up. Tell them that you need a replacement, if they tell you that they will get it repaired, just say a NO to it. Because it will be time consuming and they will end up screwing the device even more. Just simply say that you need a replacement for your device.
They will inspect the device, see if there are any chances of wear and tear.
Then they shall do some online form filling thing, and give you some papers to sign. Read and sign them.
Later they will check the phone and the accessories, if they find everything is proper, they will pack the phone. And tell you to go back to the dealer, along with the letter they provide you.
Give your faulty unit to the dealer, also the letter, and get your replacement device. Or any other phone if you wish. (That's all that happened in my case)
Many of you will end up getting your phone for a repair. Which will not only consume time, but this problem will occur more often. So better say a no no to the repair.
I was lucky enough to face this issue right after 7 days of my purchase of the device. And I got a replacement. Also, in my case, the service center wasn't authorized to open the devices. They needed to send it to some other place which was far away from my city. I did tell them to replace the phone and fortunately they agreed to it. I later went to the dealer for a replacement phone, he didn't have 816 in stock. I got another phone instead.
And NO, a flipcover or anything as such will not help you from protecting your phone. Trust me on this. It has nothing to do covers and how you keep your phones. We all keep phone in pockets, and not all face issues like this. This is because of the poor designing flaw by HTC. Which is later solved by its successor the Desire 820. There are numerous complaints with the hardware buttons on the HTC Desire 816.
I was lucky because the HTC distributor was a friend of mine. And he did assist me very well.
Hope this helps somehow.