Ur-erratic coolant temp reading on MB

["Jouko Haapanen" <joukoh@vtoy.fi>]

I am getting some funny readings on my 88 (MB) Urquattro coolant temp
(digital) gauge.  The temp will rise very quickly (couple of minutes city
driving, 10 deg C ambient) to the middle ("N") of the gauge, and then all
of a sudden rocket to "H" and start flashing.  As soon as I start moving,
the temp will drop from max. to N in about 5 seconds.  If I stop and rev
the engine, it will go back up to H in a couple of seconds.  Hmmm...

Yes, it has coolant, and yes it does circulate.  Top rad hose seems a
little flaccid, and the  rad leaks a bit.  New rad to be installed soon
(along with a zillion other items worn after 375 000 km such as bomb,
shocks, springs, brake discs (4), pads, headlights, foglights, windshield,
rear view mirror glass (2), intake hoses (all), vacuum hoses (all).....). 
But I digress.  What should I be looking for?

Jouko Haapanen
Pori, Finland