Don't destroy it just yet. I also have a 2G iPod and I had a similar problem. My headphone jack got really touchy... it wiggled back and forth very easily, and the audio would cut out often. I thought all was lost until I found a fix someone mentioned at the iPod Lounge message boards.
First of all, you need a wired remote, preferably one that you can destroy without caring. No one likes them anyway so that should be easy, and after the fix you won't be able to use a remote with your iPod anyway. What you do is pry it open (pull on the lapel clip) and pull out the little circuit board. You're after a little white plastic ring that holds the remote's headphone jack in place. Remove the ring and jam it into the gap between the headphone jack on your iPod and the chrome body. It should brace the headphone jack and keep it nice and stiffly in place. You can't use a remote anymore, but that's okay because your headphone jack now works. I've had mine like this for weeks with no problems. The headphone jack is rock-solid stable. Unfortunately, it's still a bit loose, but that's minor - sound comes through perfectly 100% of the time.
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