Maybe you have a different firmware revision then - on this one, if it's
in standby it won't respond to the numeric keys at all unless you press
one of them, then the end call button first (before I worked that out, I
had to put every number I wanted to dial into the contact list, then
pick it to call).

I found the flashing irritating when the phone was left out on my desk
at work (have to have it on silent, so I watch for the flashing screen
when a call is incoming - having the flashing blue LED  in the corner of
my eye all day was too much). Another guy at work also had the problem
but solved it in a slightly more extreme way - phone on the desk, put a
biro tip onto the light and hit the top of the pen to break the bulb ;-)
At least I can reverse my mod by just scratching the paint off!

To stop the blue flashing light, just turn 'Sleep Mode' off in settings. It
does make the battery life last a lot longer though!