After reading this comment from Enrico Giordani (Ciao!), whom I worked with back in 1999 while working for Microsoft in Redmond, I decided to try Vista SP1 again though this time with my USB key in my pocket. Guess what? I no longer have the display problem as described in the SP1 readme. I’m at a loss to explain why my machine is now working but I’ll take it! I reconfigured my video card, tried different resolutions, unconnected my external monitor and rebooted at least a dozen times trying to work around the issue but alas nothing worked although all the while my USB key was in its slot with $g(ReadyBoost) enabled. I removed the USB key and reinstalled SP1 from scratch and Sleep is now working as it had with the RTM. I’ve also reconnected my USB key with ReadyBoost enabled as well as with my external monitor attached and all is working just fine.
Anyway, Enrico, thanks for the comment you salvaged SP1 for me! Grazie!
[Update: March 29] Update the link to the release notes since the previous MS link broke.