My Nokia 8210 battery did something similar (fortunately it only had a tiny battery). Being a sealed Lithium battery I could sense there was some pressure build up and before disposal I punched a nail through it to prove it was so.
I often recharge alkaline watch batteries before they get too flat (rendering them un-rechargeable), after several recharges they also begin to distort in shape meaning it's time they are despatched to the bin.