How long have you owned the home? Any chance that you've owned it long enough to have 20% equity in it so you can request to drop the PMI?
In regard to your dilemma about refinancing, I always tell my clients that if you can handle the payments of a fixed rate 30 or 15 year loan, do it! A lot of people say that they will only be in a home 3 or 5 years but, truth be told, none of us can predict the future. One has no idea what their life situation will be 3 or 5 years down the road and, at that time, may find they can't afford to make a move but might not also be able to stay in the home if their rate begins to adjust every year. For example, some people who bought in 2004 or 2005, at the height of the market, and got a 3 year adjustable may not be able to move now because they can't get what they paid for their home 3 or 4 years ago. They are in a situation where they will have to handle the adjustments made to their rate until the market recovers enough for them to be able to sell and recoup what they paid. My advice, personally, would be to stay with the 6.5% fixed as long as you can make those payments. If you have a good credit score, there's no reason, however, not to shop some lenders and try to better that 6% rate to something in the high 5's. Also, be sure to figure out what the closing costs are on the loan and how long it would take you to make that up based on what you are saving on the interest rate.