My docking station started doing weird things recently as well. When I would connect something to USB, the whole thing would freak out -- the external monitor would go off, then back on, then off again, eventually coming back on and staying on. At the same time, other devices would disconnect. After a few tries, I started to realize that it was when I was plugging stuff in or out -- that is, fiddling with the plugs -- that things would go on and off. After I let go of everything, it would settle down and everything would end up on and connected again. I checked power connections, blew canned air into the ports, etc. but eventually chalked it up to a possible hardware issue. It seems like maybe something is loose inside.
Anyway, I chatted with MS support and they are sending me a new one. Funny thing is, they aren't making me return the old one, so I'm thinking I may try tearing it apart to see if it is something I can fix myself. Then I'd have two.