Cervical Stenosis/Myelopathy

I recently had an MRI done and was found to have moderately severe spinal stenosis (7-8 mm).  I have been suffering from extreme arm pain and weakness in my arms, also some issues with walking, stumbling, shuffling, tripping.  My MRI results are as follows:

There are regions of T2 bright and T2 dark signal probably representing    
cystic change and calcification throughout much of the right thyroid lobe.    
The paraspinal soft tissues are otherwise unremarkable.  Vertebral body    
heights and alignment are maintained.  There is mild disk space narrowing    
at C5-C6.  The posterior fossa is unremarkable.  Spinal cord is normal in    
signal.  There is mild endplate discogenic signal change involving the    
inferior endplate of C6.  The following levels were evaluated axially:    
  
At C2-C3 the disk thecal sac and neural foramina are unremarkable.    
  
At C3-C4 the disk thecal sac and neural foramina are unremarkable.    
  
At C4-C5 there is mild bilateral uncinate spondylosis causing a mild    
bilateral neural foraminal narrowing.    
  
At C5-C6 there is mild bilateral uncinate spondylosis and broad-based    
posterior disk bulge.  This causes complete effacement of the CSF collar    
at this level with moderately severe central spinal stenosis.  The central    
spinal canal measures up to 7 mm at this level.  There is moderately    
severe bilateral neural foraminal narrowing at this level.    
  
At C6-C7 there is posterior central disk bulge causing narrowing of the    
central canal to 8 mm.  The lateral recesses and neural foramina are    
unremarkable.    

My questions are:  Do I need surgery right away or can I try some non-surgical things first and what would those things be?  Am I in danger of becoming paralyzed?  What exactly does "complete effacement at the CSF collar mean?  How bad is this?

Thanks for your help.

Kim