Silverado speedometer

I have a 2000 Chevy Silverado with 2wd, a 5.3l and 54,000 miles. My speedometer occassionally moves to the accurate speed but most times it hesitates then skips up, hesitates then skips again. Usually around 65-70 mph it starts functioning propoerly again; but this is not consistent. Most of the time this happens during freeway driving, but it has as of late been occuring during city driving. Could this be the Vehicle speed sensor located on the transfer case, a faulty instrument cluster, or loose connections?