You could be right, and a d-pad mod would work. Here's some information you may or may not have. http://wiki.gp2x.org/wiki/GP2X_Issues#Joystick_Problems:_.28needs_input.29
http://dl.openhandhelds.org/cgi-bin/gp2x.cgi?0,0,0,0,42,878 - some pics of the inside of a gp2x some showing the joystick...