Hi Denise,
I'm 99% sure its RMA time for this phone. This is most likely a problem with the Hookswitch. After deploying Cisco IP Phones for the last few years we (and many others) have found this to be the most common hardware problem.
There is a "Best Practice" for cleaning the Hookswitch contacts (link below) that does work on occasion. Usually the phone has to be replaced/RMA'd.
Best?? Practices for Cleaning and Troubleshooting Cisco IP Phone Hookswitch
From this interesting Tech note;
http://www.cisco.com/en/US/products/hw/phones/ps379/products_tech_note09186a00801c0810.shtml
There was also a problem with the 7.2 phone firmware that caused similar looking symptoms for the 3rd generation phones like the 7970/7961/7941. This could be rectified in the short term by booting the phone. If your issue can be fixed by resetting the phone and you are running 7.2 firmware, let me know and I will find you the Bug.
Hope this helps!
Rob