Gyro fatigue? I doubt it. Something broken? More likely.
Quick way to test it:
Plug a normal servo into your receiver's gear channel (probably channel 5). Set the gear channel endpoints to 100 for both switch positions. Flip the gear switch, make sure the servo moves from one end to the other. This at least verifies that your gear switch makes the gear channel do what it it supposed to do. If it doesn't, then figure out how you've screwed up your TX so that it doesn't send the gear channel control to the RX.
When all works as it should with a servo plugged into the gear channel, unplug the servo from the RX gear channel. Plug your Gyro lead as you normally would into the rudder channel. Then, plug the gyro GAIN lead into the receiver's gear channel.
Turn things on, watch the red LED on the gyro. If it finally comes on solid, you're in HH mode. If it blinks slowly, you're not. Turn things off, flip the gear switch to the other position, turn things back on. Watch the red LED on the gyro.
If you can't get into HH mode with either switch position, then yes, your gyro is broken.
* Making the World Better -- One Helicopter at a time! *