alice guy , Jun 11, 2005; 08:13 p.m.
I had a similar situation on a Canon Ixus many years back. I was advised that small particles of dirt [ie. sand etc] may have got in the lens mechanism and caused it to lock up. The amount I was quoted for repair was near the price of the latest [2 generations newer] version, so I went for the new model instead of fixing it.
Probably not what you want to hear, but a call to Nikon for advice is probably your best bet.