Temperature gauge problem

[nguyen@intellistor.com (Tuan Nguyen)]

Hi Folks,
I have a problem with my 87' 5000 CSQ temperature gauge. It tends to work about 
half of the time only ! I notice that when I start up the engine, it takes about 
more than 5 minutes before the needle start to move to about half way between the
marks C and H (that is normal). But then, after driving awhile, it suddenly drops
down to C and stay there for long time. After that, sometime it comes back up,
sometime it doen't. I also notice that sometime it does not stays at the normal
midway position (a little bit more or less). Note that when it dies or comes back
alive, it is not because of the road bump at all (smooth ride).
This happens to me since 3 weeks ago.
Now my questions:
1/ Is the data to the temp. gauge directly from the sensor or via the computer?
2/ Could it be a bad sensor? If it the case, where does the sensor locate at? 
   Is it expensive to replace the sensor?
3/ Could it be a loosen wire somewhere?

If you have any idea please help.
THANKS.