when clients go bad

Hi, I've done freelance web design for about 7 years now off and on. Just recently I've found myself dealing with the worst clients in the history of the world - ok, maybe not, but they've been pretty awful. After about a year of working together, the business relationship became so bad that we decided to part ways. They have now found themselves a beginner designer who whipped together a quick template site for them, but would now like access to all my source code (PHP, Flash, MySQL, and a little ASP) - without really giving any specific reasons. The site was hosted on a 3rd party shared server which the client had full access to, up until the point they terminated the hosting contract - now they're demanding the site on CD. As there is a very small web market in my area, I do not feel at all comfortable about just handing someone my source code. I know in the graphics realm, unless the contract specifically states that the original source files will be provided - they are not given. Has anyone had to deal with a similar situation? Any thoughts or opinions? Thanks -Tim