happened to me a few weeks ago. my mouse was almost 3 years old... heard that the life expectancy on those things was 2-3 years. anyway, i picked up the MS intellimouse wireless explorer... KICKS ASS! get one.
oh, but pick up a recharger and some batteries too... my batts die every two weeks.... then again... i'm on the system a good 15 hours a day.
Mine did the same thing. The original USB IntelliMouse Optical has a known short in it. The short gets worse with normal use and will eventually kill the mouse. If you contact Microsoft support they might replace it for you. They have replaced mine and a few other people I know. Maximum PC had an article on it a couple of months ago.