If you are running 2.1 then:
Settings > Sound & Display and uncheck Quiet ring on pickup.
That is probably what is causing the fade.
@the OP
Sorry the phone doesn't work for you. I hope your next phone does.
You think it would fade if I have it in my pocket walking around? Could be why people are missing calls.
It definitely says "Reduce ring volume when I MOVE phone"
Maybe I'm over thinking this one. If the phone is set to vibrate and ring won't the vibrations move the phone enough to lower the ring volume?
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