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If you are familiar with repairing electronincs I would recommend opening the unit up and inspecting the internal components of the home button and the corresponding logic board connecting point for corrosion.
You can get a new home button for about $6 on eBay. Just eBay search for iPhone Home Button.
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Most of the time when a phone is dropped or banged they break the header pins inside the phone and isent worth the repair as its cost prohibited. Best thing to do is see if you have service from your provider . if not taker the phone back to where you got it and see if it still has a warranty on it.