The heater in my 1999 ford ranger will not get warm and the temp gauge goes up and down more than normal. I did have the freeze plug replaced recently. After driving a while, the air will get a bit warmer, but hardly warm enough.
First, the idea of the gauge moving that much makes me believe there is an air block in the system. Make sure the coolant is full and see if you can bleed the system. Loosten the return line from the heater core to see if you can get air out. If that doesn't help, start the engine, turn the heat on high, and let the engine warm up. Both heater core hoses should be hot. If they are, check the blend door under the dash near the heater core for operation. If only one is hot, try flushing the heater core.