Thermostat problem?

03 Passat wagon w/ v6 and about 110k miles. My temperature gauge rarely stays at 190. At times, while it's warming up, you can see it gradually get hotter, but then it goes all the way down. At times it goes to 190, but then it drops again. I'm assuming its a thermostat problem, but I'm curious as to what damage it could be doing, if any. Or what's the worst case scenario...

Any help would be appreciated...