This morning, on my way to my 8:30 class, I plugged in my iPod Touch 1st Gen as usual and began the long trek on foot. While I was walking, I noticed that the audio was switching back and forth from one earbud to both, which really got on my nerves. At first I thought it was my earbuds, so I took out a spare, but the problem persisted. If I hold the wire in a certain way, the audio stays in both earpieces, but when I'm walking around with it in my pocket, eventually it starts all over again. Since my iPod Touch is past warranty, should I upgrade to the shiny new Touch, should I send in my old one for repairs, or is there a way I can fix this myself?

Sounds to me it's the contacts inside the headphone jack which have gotten worn out with time. I had that happen to my old mp3 player as well - wiggling the plug would get it back.
EDIT: it's the iPod TOUCH? Yikes, expensive to just buy a new one o_O

Try getting a new pair of headphones first, preferably ones not made by Apple.
And if you are going to buy a replacement, wait until the next wave are in shop shelves first.

I've had this one for 2-3 years, so I had a good run with it.