Jitter in the output would be one thing. What happens if you stop sending the PWM pulse? If the wiggling stops, that tells you the problem is with the signal.

Have you put a scope on it?

Another possibility is that the servo isn't seeing the signal clearly. What's the amplitude of the PWM? How square is it? If you insert a comparator inline to boost the signal so it matches the bus, does this change the behavior (a simple way to do this is using the Spektrum SPMCP).

You might need to filter the power a bit - try putting a big electrolytic right at the servo connector to clean up the power bus. Digital servos are notorious for sending crap back to the supply, since they are usually designed around the supposition that a battery (a big filter) is on the other end.

Andy