For those who might be interested. I've been reading a lot about this and never found any useful answer but somehow I managed to solve it. So, I hope the problem's the same for other people.

This happened to me with a Toshiba Satellite 5200-801 and SuSE 8.2 but it seems to be there as far as 7.0. Mandrake and RH were fine however.

The problem actually lies within the XF86Config where SuSE detects a lot of mice and pointer input devices. Just remove all of them except the first one and be sure to remove all references aswel.

Restart X and you should be fine hopefully.
Hope it helps 'cause I know how it feels to get stuck for days with a mouse having a lowest resolution of 5 pixels.

barr.