There was no obvious reason why it broke. I thought my choices were 1) fix or replace it, 2) take it to the Apple Store and have them do it, 3) buy an external track pad or mouse or 4) buy a new MacBook to replace one barely 2 years old.
1) seemed reasonable, since I like to fix things and am fairly competent at it and the warranty had expired. I found a video on the Internet that described various trackpad problems and how to fix them. It could be broken, out of adjustment, or just full of dirt and dust. It also listed the tools needed to repair or replace the trackpad: a 00 Philips screwdriver and a tiny Torx wrench and a hex (Allen) wrench. I had all the tools, so I gave it a go. I removed the bottom and it was filthy inside! I blew out all the dust with compressed air, which helped a lot, but click and drag (essential for Lion) still didn't work, and simple clicking was intermittent. (This didn't match the symptoms described in the video, though.) So I attempted step 2, removing the battery. That's where I discovered (not mentioned in the video) that they used the weird 5-point Torx screws instead of normal 6-point Torx or Allen screws. I blew out as much dust as I could (it then worked very slightly better), and put it back together to regroup.
I considered taking it to the Apple store, but was informed it would be at least $150, more if the trackpad needed to be replaced. I borrowed an external USB mouse, which worked but it was another thing to cart around, required a flat surface to set it down, and it didn't do multifinger gestures at all. A bluetooth external trackpad would have solved that, but again it is an additional item to carry, and greatly reduces the MacBook's portability, since you need a place to set down the trackpad.
Buying a new MacBook seemed ridiculous after only 2 years.
I made one last search for trackpad repair hints and discovered ifixit had the secret pentalobe screwdriver. I decided to buy the slightly more expensive one based on the theory that you should always get the best tool you can afford, because cheap tools will cost more in the long run. It arrived in 3 days, even with the cheapest shipping option.
I took the bottom of the MacBook again, not too dusty inside this time, removed the battery (which was a snap with my new screwdriver), cleaned the trackpad underside with compressed air and a lint-free cloth, and reassembled. No joy :-(.
So I disassembled it again, and tried turning the trackpad adjustment screw 1/8 turn clockwise (be very cautious about this screw). Now the trackpad worked a little better, but still not right. Turned an additional 1/8 turn, and it was as bad as before. Turned it back 1/2 turn counterclockwise (so it was a 1/4 turn from where it started), and it worked perfectly! Hooray!
The longest part of the whole process was the 5 minutes I spent searching the floor for one of the tiny philips screws that holds the bottom cover on the case. I gave up, removed the rest of the screws, and when I was prying the bottom cover off, I realized there was something under the MacBook. Lifted it up and there was the missing screw! I then had an idea, went and got a magnet off the fridge and sure enough, the screws are magnetic.
I recommend getting a small magnet (a fridge magnet will do) and using it to hang on to all the screws so you don't lose them. The magnet will also make it much easier to find and retrieve a screw if you drop it, especially on the multicolored rug under my dinning room table.
I also use a cheap (50 cent) plastic icecube tray for holding parts while it's disassembled.