I would ignore motorollin advice if, as you said, "the drive doesn't notice" at all inserted diskette. I doubt dust would cause that much damage.
Does drive click at all when empty? check power if it doesnt.
Do you hear heads moving or motor rotating when diskette is inserted? if not the problem might be in sensor that detects diskette has been inserted, its in corner, together with write protect sensor, IIRC.
If heads move, they could be misaligned, its common problem. there is a software on aminet for calibrating them but I'd advise replacing the drive.
www.vesalia.de can provide you with replacement too, it costs 19.9 euros.
But the best/cheapest solution would be to modify the FDD cable slightly and connect cheap, easily obtainable PC floppy drive. aminet has instructions, and posts here from past.
edit: bah I'm getting slow..
