I was having same problem..it's a design flaw. I opened mine up yesterday and fix it(!), finally, after using the on-screen keyboard for a month.
Here's your fix...
http://forum.ppcgeeks.com/showthread.php?t=62876
(the bit about pressing down space key really hard worked for me once...then didn't work anymore. Once you open it up you'll see the design flaws...easy to fix)