This problem may have already been addressed, but I haven't found it yet. I have had my Storm around a year. I have started having problems with physically using the phone. Sometimes the touch screen works, sometimes it doesn't. The highlight jumps here and there when I try to chose something. I've tried upgrading to 5.0, but that hasn't helped. My local Verizon store told me to restore it to factory defaults and see if that would help. I went back to the Desktop Manager to do that, but it doesn't have an option for original factory settings, or at least, I couldn't find it. Help?
It sounds like you might have more of a hardware issue than a software one. The Desktop Manager won't take your phone back to factory settings but you can do it from the phone. When you upgraded to OS 5.0 did you wipe the phone or just upgrade with Desktop Manager? I would suggest wiping the device with a program called BBSAK then reload the OS. If you are not comfortable with this process I would deal with CS and get a replacement if possible.
Here is how to reset phone to original factory settings: Options>Security Options>Security Wipe.