What's the best adhesive to use when reattaching an iPhone 5 home button?
I realize this is an older question, but a common problem for several iphone models. Might help someone.
 The whole assembly is larger than the home button hole. Problem is the round plastic button does come loose from the whole assembly. It is glued in place and can break free. 
As long as everything is functioning correctly, it wouldn't hurt to put a dab of glue on and stick it back in. Be careful not to use too much, as it could cause more problems!
Good luck