I assume the case is undamaged & therefore wasn't dropped.I suggest this is a firmware
problem as the phone hasn't been inspected
internally before. Maybe related to SIM card?
Try copying SIM card to another & replace it.
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you have to clean the joystick by using contact cleaner. open the cover of joy stick, there is a switch inside it having a metallic cover. use contact cleaner and let it for few minutes. DONT FORGET TO REMOVE LCD FIRST. it can be damage with contact cleaner. i had a bad experience of it. btw it happens with sony ericsson phone joystick problem.if joystick problem still persist u have to show it to sony ericsson repair centre or your warranty center of mobile.and u can also use the keys your keypad keys for up down left right.