Well my knowledge of Jettas is rather limited, but the VSS is a common problem with older Accords (which I do know a bit more about). Typically if the VSS starts to go, your speedo and tach will go all over the place, your cruise control will be very erratic, etc. Another similar problem is the TCM or TCU(the transmission control unit/module) if the car is auto, this will cause shifting problems, the speedo will stay at 0, etc.
They cause very similar problems, and I don't know if their effects differ drastically on a Jetta...but on a Honda, both throw CEL, so you can check the ECU for codes and that helps.
If it is either of these, my suggestion would be to get one from a junkyard or a parts car...the honda ones sell for a few hundred from the dealership, but can be found at a junkyard or used online for under $50.
These 2 links show where the VSS is and what it looks like on an Accord(same on manual as on auto)...hope they help somehow.
http://www.cybertrails.com/~bestinth...tLocation.html
http://www.automotiveforums.com/vbul...0&goto=2536140
And if it is the TCU, typically they are under the passenger kick panel.