Don't confuse the 1 1/8" threadless stem with a quill stem for a 1 1/8" steerer. Two different beasts.
A 1 1/8" quill stem has an outside diameter of 25.4mm (1"), it fits inside the steerer with will measure 1 1/8" on the outside. If this is what you have then your bike is a candidate for replacing the current setup with a threadless 1 1/8" setup.
AASHTA (
http://sheldonbrown.com/harris/stems/1-1-8-quill.html)
__________________
This is Africa, 1943. War spits out its violence overhead and the sandy graveyard swallows it up. Her name is King Nine, B-25, medium bomber, Twelfth Air Force. On a hot, still morning she took off from Tunisia to bomb the southern tip of Italy. An errant piece of flak tore a hole in a wing tank and, like a wounded bird, this is where she landed, not to return on this day, or any other day.