Thanks... I'll try those suggestions. I noticed it seems to do this in everything except the PSPs XMB. If your suggestions don't work than I'll probably need to replace the d-pad. I think its just a calibration issue and hopefully a system restore will do the trick.
UPDATE:
Tried all 3 and none fixed the problem.

UPDATE 2:
Calibrated it in System Info and now it works flawlessly! Thanks again for all your help!!!