Edit: my comment below only applies if you are using physics. If not, I have no clue why you are having the problem...

You might want to read up on: http://blog.anscamobile.com/2011/08/solutions-to-common-physics-challenges/

There's a section entitled Objects are sticking to walls.

I also had a problem with object sticking to a wall -- once it's stuck, it won't budge. If I remember correctly, I think it was because I didn't plot the physics body of the wall properly (i.e., if you are using polygon to define the physics body, it must be defined in clockwise order).

If none of the above applies to your case, hopefully, someone else will chime in to help.

Good luck.

Thanks for the support.

But no there is not physics involved in the object that is being dragged or the boundaries.

Thanks anyway, and good luck to YOU sir.

I hope someone else will help you out, Matt. I'd also like to know why this sticky dragging is happening too (for my future reference).

Then you're in luck, Naomi.
I was just having a bath and the solution came to my water wrinkled self.

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            if (game.x > 0) then
                game.x = 0;
                return true
            elseif (game.x < -480) then
                game.x = -480;
                return true
            elseif (game.y > 0) then
                game.y = 0;
                return true
            elseif (game.y < -320) then
                game.y = -320;
                return true
            end