I currently have a pretty poor internet connection, the local ISP blames the netgear wirless router we have. Saying its gotten old (it is that white wireless G router that everyone seems to have). I have seen modems for sale on newegg and reviews saying they got faster internet than with the provided modem. So maybe its my router, maybe its the ISP's modem.
next month im moving and am wondering if its worth buying a new router (probably something with wireless-N) and maybe a new modem.
Is there any truth to the claim that the ISP modem might be slowing down potential speed?
There's a good chance that the ISP's modem is hindering your speeds some. There's also a good chance that your Netgear router is too (I have the same one by the way, lol).
There are a lot of variables that are taken into account when determining the bottleneck of a network connection. Things such as the ones you're already addressed, but also the time of day you're using the internet, how far away you are from your wireless router, how far your home is from the ISP servers, what kind of medium your wireless is traveling through to get to your device, what kind of weather your having at the moment, etc...
If you have outdated hardware then yes, that will most definitely contribute to an increase in gap between actual speed and maximum potential speed. A lot of ISP modems are very generic and don't offer the best quality of service, but there are others that do. It kind of depends on the service that you pay for and the hardware they provide , as well as the kind you add to the configuration.
All in all, get a new wireless router and you should see some improvement. If you're still not satisfied, talk to the ISP and ask if they can issue you a better modem, and go from there.