I typically just use the leather hip wallet that comes with the 6700. I was thinking hardware failure as well but the wierd thing is that the only button I am typically using when reading is the center up/down/right/left switch. I have taken note that it has never been associated wtih pressing the talk/phone button. I could probably try to remap those buttons using a reg hack and see.
I fear that it is hardware failure, though.
Thanks!