I had the same problem and it turned out to be a bad sensor. Required replacing a $20 part and takes about 10 minutes to replace.
In my Jeep Grand Cherokee (2000) the check engine light went on and I was able to retrieve the error code indicating that the Output Speed Sensor was malfunctioning. Apparently when this happens, the computer will cripple the transmission and prevent you from getting out of first gear. When the sensor was replaced, the transmission resumed normal operation.
For details see: http://www.wjjeeps.com/speed_sensors.htm