are you using it on a tripod with the IS on? It's first gen IS, so you have to turn it off for tripods, or it can act erratically and actually create blur.
Are you trying to focus on objects too close? Have you accidentally switched the limiter to 6.5m to inf, and are trying to focus on objects close than 6.5m? Or are you trying to focus on an object with too little contrast, and the AF can't get a lock?
Those are all the explanations I can think of, if it isn't one of them, then it'll need a trip to a canon service centre.
Mine doesn't tend to act up with IS. If you move it around fast with the IS on, it can jump a little bit in mode 1 (If you're trying to pan in low light, you want IS mode 2), but if you hold it reasonably steady, I rarely if ever get it acting up.