Replace the thermostat making sure it is the genuine SAAB from the dealer! You don't have to drain the coolant, although you will lose some from the thermostat housing....just refill to required level after replacement.
Yes, but he says the gauge is going from zero to mid range (normal), not going into the hot range. If the gauge is bouncing I would think it's reacting too quickly for the problem to be heat / thermostat related. Could be a broken gauge though, but I would check the connections first, then the sender and gauge.