Something similar happened to me as Squabble. I had air in my cooling system, and my needle would jump around a little bit once warmed up. Once I got it out (parking on an incline, squeezing upper radiator hose, etc), my temp needle stays fairly smooth.
Not as smooth as other newer cars, but not quickly jumping like before. I was afraid I was going to have to replace the temp sender, clean the needle gears, etc.
A rare instance where repair was easier than thought...

__________________