Imac 10.7.4 trouble

Ever since I upgraded my iMac operating system from 10.6 to 10.7, it freezes up, if left "ON".
All System Preferences are set as they have always been.  Computer and display is set to sleep in "10" mins.
However, after 20 mins the computer is still on. I can move the curser, but it draws a blank area across the screen in its track.
No other part of this operating system is able to work. 
I've been happy with my other Apple computers for 8 years. but this 10.7 OS seems to be problematic.
Does anyone have an idea how this can be corrected?

The only bug like this I've seen is when "log out after xxx minutes of inactivity" is set.  If you're using that try unchecking it and see if you get better results.
It's in System Preferences > Security & Privacy > click the padlock and authenticate > Advanced.. button.

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