Car problems - 2001 Volkswagen Jetta

I drove Sharon's car to work today so that she could have mine for her drive to work - the Jetta has been acting up. I now understand Sharon's concern with continuing to drive the vehicle in its current state (even though the dealership said "its okay to drive" until we get it in for service). On highway 427 the car suddenly slowed and showed 0 rpm, then jerked and showed 4,000 rpm and I could only reach 95 km/h with the peddle to the metal - it is never good to slow from 120 km/h to 95 on the highway without the brake lights coming on... After jumping lanes a few times and luckily being fairly close to my exit, I could get on the shoulder and fiddle a bit. Seems to me that the car is dropping out of over-drive. When I put the car into 3rd gear I got almost the same performance as when I had it in OD - I think the automatic part of the automatic transmission has gone berserk. Anyway, seems okay (so far) if I drive it like a standard and don't go above 3rd gear - which means no highway driving for me...! Not so bad though, I'll take the back roads home so I can justify a speed of ~90. Still a pain in the arse. The dealership said it was the speed sensor that was bad - which makes sense given the resulting performance, but one has to ask...what's wrong with using the speedometer gadgetry? Why add some special sensor to the mix (which apparently has a tendency to go bad) when there is already lots of speed measuring options available? Whatever...