retrolefty:
A simpler method might be to mount a small magnet on the wheel and have a fixed hall-effect switch sense the magnetic field as it passes by.Lefty
Lefty,
I see more often the other way around 
The circuit will rotate with the hall effect sensor switch and a magnet (small and strong, what are they called?) is strapped on the fork facing towards the wheel.
Try this one:
I use it on my POV system. It's not a bike wheel though.