My IntelliMouse 4 had the same problem. I opened it per AlexR's instructions (updated by anchor40). I was surprised to find that it was pretty much clean, but what had actually happened was what kdk_warhead mentioned. The rubber had expanded. For the IntelliMouse 4.
The clearest indication that this was not caused by dirt was that the problem only appeared when the wheel cover was attached, without the cover the wheel spun perfectly.
I didn't have to enlarge the circuit board, luckily, I just had to increase the size of the plastic cover slightly. I used a round file, but a Dremel would also do the trick, and enlarged the opening by about 0.5mm on the sides, and a little more near the front and back. Once I realized that was the problem, it only took about five minutes to correct it.
Now it works just like new. Definitely worth the effort to keep this great mouse working.