Hi Geeg. Like you, I still ride a freewheel. Some water got into yours, or possibly really old dried-out gummed-up grease. The cures for both are the same:
1. Replace it. They are getting hard to find, but are not terribly expensive. Certainly cheaper than a rebuilt wheel with internal gearing. I bought my last one from Loose Screws at http://thethirdhand.com/
2. Find a bike shop with a special tool for flushing it out with solvent and injecting fresh oil.
3. Disassemble, clean, and re-lube it yourself. I do mine every spring. Try it only if you are comfortable with this sort of thing, as there are about 100 tiny ball bearings in two races inside. If you have ever overhauled your wheel bearings happily, see removal instructions at http://bicycletutor.com/replace-freewheel/
. The incomparable Sheldon Brown shows removal and disassembly at http://www.sheldonbrown.com/freewheels.html
If yours has a lot of miles on it, or a lot of gritty years, the water may well have carried in enough grit to wear it out. You may find the balls corroded and the races pitted.
Internally geared hubs are definitely better sealed than freewheels but have their own disadvantages: cost, difficult maintenance, cost, restricted choice of gears, and cost.
Why not consider a cassette hub? The better ones are well sealed and not expensive. They had taken over the market for good reasons.