Lately I have noticed my temp guage walking slightly from as high as 1/2 to back down to 1/4. If you keep an eye on it it is possible to watch it jump from 1/2 to 1/4 quite quickly. It doesn't seem to matter much the outside temp or whether the AC is going. Does this sound like my T-stat is on the way out, or could it be something else? Thanks!

Hook it up to a OBD II scanner and see what the temperature is actually doing.

The temp sender might be heading South.

Please excuse my ignorance, but what's an OBD, where do I find one, and how much do you expect that would cost?

OBD = On Board Diagnostics.

O use the Auto X Ray scanner - http://www.autocheckup.com/default2.htm

It could be any number of things.

1) Bad coolant circulation (radiator clogged with debris)
2) Thermostat going bad
3) Temp sensor going bad (although unlikely since I have never heard of one going bad)
4) Air bubble in coolant system (although wouldn't cause that amount of temp flux that you describe)

IMHO I think you are looking at a 1). I would recommend going to Jiffy Lube or something equivalent and having the system get a high-pressure flush. While they are at at, replace the thermostat, its only a few bucks. Cost you around 50-60 bucks tops. You would be amazed at what they blow out of the radiators with a such a flush after the car has some years/miles on it.