re: Do people still sit up with the dead at funeral homes?

This is a common a jewish custom called Shemira. The Talmud maintains that the soul of a deceased person will hover the body, lost and confused, until it departs. The sitters soothe the soul of the deceased by reading Psalms. Back in the day, body theft was a real concern, so Shemira also served the basic function of guarding the body.