intermittent touch screen response

Phone worked fine until touch started to become intermittent. I finally opened it checked the connections and re installed and it worked as it should. Worked for a few months then went back to the same problem. Bought and installed new touch screen panel. Problem persisted. I plugged the phone in to itunes pondering if I should up grade to 4.2 from 3.1. I'm not sure if the info on the phone will be saved and re installed with the new ios and decided to wait. After the phone synced I unplugged it and it worked great, but not for long. I'm not a heavy user of the phone. So any input to this issue would be great.