I'd first make sure that the speedometer cable is not frayed and is properly lubricated. Pull the housing off both ends and then pull the cable itself. If its not frayed or damaged, then lube it up, put it back together, and get a new speedometer. Others might have better advice but that's how I'd tackle it.

1987 Raider, 346K miles and going strong -31" tires, otherwise stock.
http://tidbitsfortechs.com/
http://actionpcs.com <-- $39 remote PC repair, guaranteed.
How to include pictures in threads on 4x4wire (Youtube video)