My Shift running CM7.1 just started doing this out of the blue a few days ago. My first thought was that the problem was software related, so I nand backed up my rom and tried a clean stable cm nightly.. Still had the same problem.
I spent a few hours on google and found a few other people with the same problem.
This is becoming a big problem for shift owners...
They all claim it is totally hardware related, and your only options are:
to try and buy a flex cable assembly online (theyre about $30-$40) and attempt to repair the phone yourself. (youtube has some nice disassembly videos for the evo shift).
or run the sprint RUU program on your shift to put it back to stock un-rooted rom, and then take the thing back to sprint and see if they will give you a new one...
OR, just forget you even have a slide out keyboard, and train yourself to use a decent on-screen keyboard like swipe etc..
and obviously, you could just throw the shift in the garbage and go get yourself a better phone. There are dual core droids out there now that will run way faster and smoother than even an OC'd 1800mhz evo shift, right now.
here are 4 links that you will find very interesting
bit.ly/w18SUp
bit.ly/sIGhC4
bit.ly/txn4rd
bit.ly/qm1S60