Just started to get this problem on my March 05 GS, although I realise that it has been lurking in the background as I've occasionally had the engine cutting out when I put the sidestand down whilst in neutral. At the moment, 1st, neutral and 2nd only show when they feel like it, but 3,4,5,6 seem to be OK. Being a wimp, I don't tend to ride in the wet and being lazy I rarely clean it. I certainly haven't used a jet-wash on it.
I took a look at the sensor and the wire connector plug was almost all of the way out of the sensor socket. I've pushed it back in but haven't ridden it since although I'm still not getting 1,0 or 2 showing. I disconnected and reconnected the battery just in case it was a "reset" thing, but this didn't make any difference. I'll see how it goes next time I take it out, then I'll unplug it again and try the WD40 routine.
It's not a show stopper, as this is the first bike I've had with a GPI anyway, and it's not difficult to figure out if you are in neutral
I don't suppose I'll get much sympathy from the dealer as it's outside the warantee period, but I might give it a try as I've only done around 4500 miles. Anybody know how much the positon sensor is and will the gearbox oil empy itself all over the drive if I take the sensor out