2nd gen ipod touch sleep/wake button will not work

Like the title says, the sleep/wake button (top button) doesn't work on my 2nd gen ipod touch. In short, I can't put it into sleep mode (I have to wait the one minute), turn it off to save the battery, take screenshots, or even reset it (without iTunes, anyways).

I don't have any guesses on why it's not working. It just stopped working one day. I don't see water damage (via the water damage detector in the earbud jack), and I don't think I dropped it in a way that would harm it (unless dropping it on carpet counts).

I should also mention that randomly, one day after school, I was messing with it, and the button worked. I think the battery had died, and I managed to turn it on then. It worked for a few hours (I charged the battery), and then it went back to not working.

The warranty's up (and I'm broke), so I can't repair it. I also want to point out that the problem started not long after the warranty expired. What, at this point, is my best option? Should I just save up for the newest model? Or would it be cheaper and more efficient to save up just enough for a repair? Any other options I should consider?

Thanks in advance.