A model is presented which calculates the gas temperature and chemistry in the surface layers of flaring circumstellar disks using a code developed for photon-dominated regions. Special attention is given to the influence of dust settling. It is found that the gas temperature exceeds the dust temperature by up to several hundreds of Kelvins in the part of the disk that is optically thin to ultraviolet radiation, indicating that the common assumption that Tgas=Tdust is not valid throughout the disk. In the optically thick part, gas and dust are strongly coupled and the gas temperature equals the dust temperature. Dust settling has little effect on the chemistry in the disk, but increases the amount of hot gas deeper in the disk. The effects of the higher gas temperature on several emission lines arising in the surface layer are examined. The higher gas temperatures increase the intensities of molecular and fine-structure lines by up to an order of magnitude, and can also have an important effect on the line shapes. ; Comment: 14 pages, 10 figures, accepted for publication in A&A