Un plug the sending unit and it should peg full hot. If it does you have a faulty sending unit. If i does not than you either have a wiring issue or an issue with the gauge itself. I had the same problem recently with my temp. gauge and I ended up replacing the gauge in the dash. You have to pull the gauge cluster and remove the guage from the back of the cluster. I ended up pulling a complete gauge cluster from a u-pull it junk yard transfering my speedo and re-installing. Everything works great. When I remove my cluster I ended up breaking the mounting studs for the oil pressure switch and the gear indicator. So that is why I replaced the whole cluster. It is not that hard to remove the cluster and replace the gauges. You just have to be carefull not to break anything else.

 

I had a very similar issue on my '93 Sonoma pickup. The wire wasn't making proper contact with the sensor and it would bounce around all over the place. Check for continuity with the wire. If you have the key on and you ground the sensor wire to the negative battery terminal the gauge should go all the way up to the top. If it does the gauge is OK. The way the system works is that the temperature sender is a thermal resistor. It relies on measuring the resistance to ground in the circuit. If there's any kind of break in the wire or the connector gets loose the gauge can bounce around all over the place as the computer tries to figure out what the rapid changes in resistance mean.