I don't think I have a true faulty diagonal problem, its just in a few games. Games like Lunar Knights, or Megaman Battle Network 5 DT. I find myself having to move in zig-zags, or have the characters appear drunk. Or not move at all. I can't even get the games to walk in a straight diagonal. But, I have no problem with other games. In SM64, I have no problems. It gets very frustrating, very fast. I didn't have this problem with my DS phat.