2003 Toyota Camry Temperature gauge drops when heater is tu

Hi

My car is acting weird - the temperature gauge drops down gradually when I turn the heater on. This is a problem only in the mornings. My car is parked on the street overnight. At work, it's parked in a covered area and I never noticed this problem in the evening. The car never overheats and also blows good heat when it's warmed up! The thermostat was replaced last winter when I had a similar problem. I had a toyota technician look into it, but he said the thermostat and waterpump need to be replaced. He said my car's waterpump was leaking because of slight corrosion. I do see that the coolant level is 'slightly' below the High line. However, I'm not sure whether it's a sign of a faulty pump or something else. The tech told me that it would cost $800 to replace both! I'm confused now. I would greatly appreciate your advise.