I, too, was dismayed to find that isset($foo) returns false if ($foo == null). Here's an (awkward) way around it.
unset($foo);
if (compact('foo') != array()) {
do_your_thing();
}
Of course, that is very non-intuitive, long, hard-to-understand, and kludgy. Better to design your code so you don't depend on the difference between an unset variable and a variable with the value null. But "better" only because PHP has made this weird development choice.
In my thinking this was a mistake in the development of PHP. The name ("isset") should describe the function and not have the desciption be "is set AND is not null". If it was done properly a programmer could very easily do (isset($var) || is_null($var)) if they wanted to check for this!
A variable set to null is a different state than a variable not set - there should be some easy way to differentiate. Just my (pointless) $0.02.