Think of it this way: if you close the lid, and your PowerBook does not go to sleep, the display will stay on. With the lid closed, the backlighting on the display will get quite hot, and so will the rest of your PowerBook, risking overheating and damage to your PowerBook.
So, what to do?
You can operate in clamshell mode, which allows you to work with your Mac while the lid is closed. That means that you are using an external display, and keyboard/mouse. Connect those items, and close the lid. Your PowerBook will go to sleep. Press a key on the external keyboard - your PowerBook will wake back up (no internal display now), and the only display that PowerBook is using is the external. This is a good way to use your PowerBook as a desktop computer.
If this is not really the answer for you, do you want the lid closed, yet the PowerBook still is processing, downloading, etc, while you are sleeping, gone from home, etc? I know you wouldn't want the PowerBook to run while you are carrying it in a case/bag because of the same heating issues.