Been experiencing this problem myself where the digitizer would go haywire. Check out this Compact Jam for some tips on how to fix the problem temporarily. My advice is if its getting so bad, send it in for repair or better yet demand i-mate to send a new one.
Mine is getting worse and I have sent i-mate an e-mail detailing the problem. This is not an isolated case and as with all other HTC products - digitizer problems are very common on HTC built PDAs.