@veryphatic, I know that you are powering your 7805 using a 12V DC supply. Is that 12V DC supply properly filtered? If you are not using a battery source, chances are that the 1uF cap there is not enough. Try using a 1000uF or higher cap there will dramatically reduce the noise issue.
Also, if you are using a power supply (versus batteries), you will need to consider adequate decoupling, and the trace placement can also affect the noise issue.