E30's have electronic speedometers, so you have an electrical problem. First just check for loose connections behind the instrument cluster. Thats what my money would be on. E30's are notorious for having things come loose back there. :wink
I too have this speedometer problem. I believe my problem it the speedometer tranmitter in the differential. I removed the boot and it was all corroded. Like when you don't change the batteries in your tv remote and it turns into white and green pasty mess.