Craig- I am really shocked. Not wanting sex all the time-you must have moved into real adult world where the demands of life get in the way of the once all important things.

Don't worry -I have been told it happens to most guys around 30.
It really does sound like she is feeling insecure. If you have feelings for this person and want to keep her around but her smothering bothers you-tell her. Tell her exactly what behaviors you find smothering. Be direct and indicate while you do not have a desire to end the relationship or see other people you do want a heathy and happy relationship with her. Then tell her in healthy relationships both people have interests and friends outside of the relationship. Learning how to behave in a serious relationship is a learning process-my guess you have already done this but due to your age differences she probably has not figure these things out.
As far a sex goes-good and great sex is a learned activity. If she needs to learn better ways to please you and herself find ways to explore these activites together (how to do videos, books, etc...) My advice make the relationship and sex talk two separate discussions so there will be no confusion in her mind that these two areas are connected and good sex is a requirment with being in a relationship with you. This will only make her feel more insecure; hence, more smothering behaviors. If there are underlying problems (i.e. body image, past trauma) that get in the way with enjoying a sexual relationship with you-encourage her to seek some counseling to resolve these issues
Don't mean to sound like I am lecturing-just expereince talking after 37 years of marriage and two sons who had the same problems when dating their wives.
Oh yeah my last piece of advice-after the relationship talk do not under any circumstances have sex immediately afterwards. Sex can be a really emotional activity with women and she may get confused with message of your talk. If you do-she may think you were just upset about something else and blowing off steam. The conversation probably will not be taken as serious as you intended. Instead plan the discussion prior to going out of the house for a scheduled activity.