Does my Mtn bike need new bearings?

Tyler has the right idea, but it's a little more involved than that. From the symptoms, it sounds like the hub bearings are indeed loose and if you have been riding it that way for any amount of time they are probably toast.

There are many fine sites with tutorials to show you how to service the hubs; Park Tool is one.

You will need a set of "cone wrenches" to take the hub apart properly. If you are lucky, the bearing-adjustment "cones" are in good shape. If not, they must be replaced. The bearings will have to be replaced. You will have to learn to adjust the thing properly when you put it together.

Here's the link... Good luck!

http://www.parktool.com/blog/repair-help/hub-overh...

It would be a GREAT idea to repack the bearings with a bunch of that yummy, sticky, pain in the *** grease!

I do it to ALL of my bikes at least once a year. It's a pain in the butt if all the bearings fall out, but that just goes to show they've really been needing some grease. (They're dry).

My guess would be that your two nuts and two bearing holders (I don't know the technical name for those, sorry) have loosened up, allowing play in where they usually are just a pin away from firm against the bearings. I don't know if your bearings are dry at all or if that's even the case (Just trying to work with your description) but my best bet would be what I just said.

Your worst case scenario would be that you have lost and/or one or more of those bearings have fallen out. HOPEFULLY that's not the case.