Yes a nut with attached ring has come off on the inside, and currently resides near the lowest point of your handlebars.
As alantf said use something with a hook (bent coat hanger, spoke) to work out the rubber cylinder, then put the bike on its side to have the nut fall out.
If you rip the rubber cylinder apart, order a new one (no. 7 on the diagram):
http://www.mrcycles.com/fiche_sectio...003&fveh=10117
BTDT. :roll: