the meese at the college computer lab do the same thing (they're dell too). Basically it's a problem with the technology i.e. the taking of "pictures" by the mouse and comparing each picture to show movement. The mousepad you are using, does it have a repeating pattern or even a random pattern? You might want to change the pad and see if that fixes the problem.
Optical mice can freak out when used on darker or semi-reflective mouse pads/surfaces. The result is usually similar to the cursor 'jumping' you mentioned. Try to use a mouse pad with a lot of variation in its graphic. Worse comes to worse, your mouse is shot and you may have to drop 10 clams for a new one.
