Curious as to whether captainmpva's issue with his 2005 WK was ever resolved.
Just returned from a Jeep dealership where I had a similar issue investigated (also for a 2005 Grand Cherokee, 5.7L Hemi); results of investigation indicated a bad "actuator valve" in the front differential, according to the Service Writer - which corresponds to the front ELSD solenoid valve specified in the Jeep WK Service Manual. I'll get the part number and post it soon.
Projected cost is approximately $200 for parts and related supplies, roughly $700 total for the job, with an expected repair time of 5-6 hours. I'll have this work done when the part arrives in two days.
Thanks to all of the posters on this forum, I had been able to come up with an initial diagnosis on my own - and was somewhat relieved to hear the service technician came up with the same diagnosis independently. [I say "somewhat", because I would have preferred to have the problem be solved with a simple differential fluid change...but it could have been worse
Edit: The part numbers are/were #52114003-AF (actuator solenoid, $63 Dealer/$48.60 Web) and #52114327-AC (wire harness, $13.65 Dealer/$10.53 Web).
Follow up, 12/13/2013: Job took 5 hours, total cost $671.35 ($500 labor, $152.91 parts, remainder tax). [Watched how the service tech accessed the front differential to get at the solenoid; he used what seemed to be a much easier (and less involved) approach than the one outlined in the WK Service Manual. He just removed the 4 bolts connecting the drive shaft to the front differential, supported the front differential with a stand, and then removed the 2 mounts holding the front differential assembly to the body. Then he just rotated the front differential so that he could access the bolts on the differential. For those that are handy and have the right equipment and tools, it didn't appear to be as difficult as the manual made it out to be. Having just replaced the front struts, brake rotors and sway bar bushings, I would have tackled the front solenoid replacement myself, too, had I known the technician's trick for accessing the front differential bolts.]