To set the button you install "shortcutd". I'm not sure what repository it's in, though. It's in one of the maemo.org ones. I'm not sure if it's made it's way to extras already, or if it's still in testing or devel.

I think "camkeyd" does the same thing, but shortcutd also lets you set what the proximity sensor does. (You can leave that part off though if you don't want to set the proximity sensor as anything.)