Interpolation?

I'm a bit stuck on how to implement good interpolation. What I'm doing at the moment is store the last pack received for each player on each client and then interpolate between that and the new packet just received for that player. The interpolation is based on the timestamps of each packet and the distance between the player positions. The catch I've found though is that if the players position isn't at expected position by the previous packet when the new one comes in, it starts interpolating from the objects current position to the next packet which slowy results in a bigger distance each time thus a greater velocity until it goes flying off the screen. So I made it lock the players position to the expected position of the last packet, this fixes the object flying off the screen, buy obviously makes it do little jumps when the position is locked to the last packet. Was wondering if this is this just a crap way of going about it, or am I doing something wrong? Cheers. Mark