Noob here. I've just installed the "official" FT5406 7" display hardware onto my RPI 3, and it works swimmingly as a display. It doesn't work at all as a touchscreen. No touch events get registered.
Suspecting that this is a DT problem for the display driver/overlay/whatever, I did a 'vcdbg log msg' and noticed that indeed, there are failures to load the various rpi-* overlays for the display. Adding 'dtdebug=1' to the 'config.txt' file revealed:
dtdebug: Failed to open overlay file 'overlays/rpi-ft406.dtb'
and similarly for the other rpi-* (backlight, backlight-overlay, etc.).
These files do not in fact exist: they have .dtbo extensions instead, although all the other DT overlays there have .dtbo extensions as well. Anyway, renaming the rpi-*.dtbo files to rpi-*.dtb had no effect anyway -- the same error messages resulted.
Scouring the web for solutions, I made sure I was fully updated to the very latest and greatest kernel, drivers, and the whole schmear. The 'uname -a' output is:
Linux raspberrypi 4.4.12v7-aufs #1 SMP Fri Jul 10 23:34:12 CEST 2016 armv71 GNU/Linux
Any solutions you know of?