1/8-inch at the king pin seems like a lot of free play to me. With the front tires installed, and the front of the truck jacked up, grab each tire with your hands at 12-o'clock and 6-o'clock. Rock the tire back and forth. If the surface of the tire at your hands moves more than about 1/4-inch, your king pins are worn out and should be replaced. Think about it. Every time you turn a corner or reach highway speeds, that much free play will translate to stability problems and safety issues.
The hardest part about replacing the king pins is getting the old ones out. One of mine popped right out and the other I needed to take to a machine shop to press out. After that, it's an easy weekend job. Most of the truck vendors (and probably local auto parts stores) will carry king-pin replacement kits. The kit includes a new pin and a new bushing above and below the axle. The bushings are usually what wear out and cause the play. Under severe conditions (previous owner did not grease the axle), the hole through the axle can also be worn. This is more difficult to fix because the hole might need to be machined and you might need to use the oversize king-pins.
