It's strange that many people play games perfectly on their GP2X (often after replacing the cap). I'm wondering why the discrepancy? Are some units better than others, or do some users have a lower tolerance/dexterity?
Except for the cap touching the case all sticks are the same. For me how well stick handle depends strongly on a game. Some are quite ok (Noiz2sa - already finished all levels without problems), some others not that great (Nebulus) and some are terrible (jumping in Turricans in Castaway is very difficult to do precisely).
I will repeat that implementing DaveC's famous biasing schemes is mandatory. It will not fix everything but it's a best thing what can be done before hardware modding.
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