Would be well worth checking that wire out.
Failing that, I had a similar problem once where my fuel and temp gauges started reading lower than you would expect i.e with a full tank of fuel the needle was only making it to 2/3rds of the way up.
I fixed it by removing the speedo assy and cleaning a small semiconductor thats screwed onto the back. Its legs just push into small 'sockets' in the track and removing it and cleaning the legs did the trick. I believe these semiconductors are prone to complete failure too.