Erratic volume output with 30GB Video iPod

Every so often while listening to music on my 30GB Video iPod, the volume erratically increases to the max, then decreases, then back to loud, etc, etc. Very annoying (and probably bad for my headphones).

Touching the scroll wheel while this erratic behavior is happening seems to toggle the volume between high (loud) and a low (quite) volume settings. After playing with the scroll wheel the iPod seems to return to normal operation. Also, during this strange behavior the iPod screen displays the normal volume feedback treatment and automatically follows the volume setting (even when I'm not touch the scroll wheel).

I have updated my iPod's software to the most current (May 2008) and have also tried the standard iPod reset as well. The erratic volume problem remains.

Any ideas how to fix this?