Ah yes, the venerable Klein Pulse Comp. Have one myself, except mine came (in 1996) with an 8-spd Shimano/Grip Shift drivetrain. The free space between rear dropouts is about 5.5 inches, roughly 139 mm. I would bet you could upgrade to 8- or 9-spd if you wanted. I have bikes with both 8- and 9-, but I'd bet 7- is fine. I agree with the last post, find a 7-spd cassette on Ebay and you'll be back on the bike quickly. If you do upgrade, though, just remember that 8-spd stuff is getting harder to find (I know this too well) as 9-spd is the new standard.

If you do get a new 7-spd rear cassette, just make sure to get a wide-enough gear ratio to suit your riding. The battle rages on about how many total gears are needed, but I'd argue that having the RIGHT gears are better than MORE. My 8- and 9-spd bikes have basically the same ratios anyway.

If you do upgrade, it gets a bit tricky since 8- and 9 spd have different chain/chainring thicknesses...not sure if 7- and 8 spd are the same.