Your phone might be in bedside mode. Go to the clock and then options, does it say exit bedside mode. If it does turn it off and you will have the LED working again. It happened to me when i first got the bold and now i feel a bit stupid about it, as i was searching everywhere for an answer. Good luck i hoped i helped.
FYI it's possible to enable the LED in bedside more in the options. If that's what you want. I personally couldn't stand having the LED flashing next to me whilst I sleep.
Let me get it right, your LED works fine right? green for signal in range and red for incoming notifications.
Did it stop working after you went into bedside mode and exited the next day?
Well if thats the case , I face the same problem too. I set the bedside option to no LED and then after exiting the LED just does not blink or rather go back to normal.
Temporary what I did is I set the bedside mode to LED flashing then all is good. I guess its a minor buf with the OS. Hope it will be resolved soon