The cartridge requires replacing. Easy to do by pulling off the knob and unscrewing the front of the unit (screws at the top and bottom). There is no need to remove the shower from the wall.
See the Shower Doctor on the internet to see the parts list and to order a new cartridge. Replacement from this point is still easy to do by removing any parts in the way and then the main screw(s) for the cartridge.
Remember to turn off the water first and run the shower to pump out the water in the pipes!
Martin Albericci, May 2007