Bicycle woes

So last night I'm riding over to Windsor at a considerable velocity. There's a huge hole in the sidewalk. After running right through the middle of it, I noticed my gears seemed to be changing back and forth with every fifth or sixth cycle of the pedals. It continued doing this on the way to class this morning, so I decided to take a closer look.

Turns out it's not changing gears, but apparently there's slack in the chain and the chain is sort of folding up over itself right as it gets off of the gear, and when I pedal, it pulls the slack out with a thunking noise which sounds and feels like changing gears. Anyway, I don't know what gives. It saddens me. That old bike has seen better days.

Has anyone else ever experienced anything like this?