I turned on encryption for the first time and set it to WPA2, PSK and AES (cipher type) a week ago, and that's when the wireless connection for all four of our laptops and an iPod Touch started dropping frequently at random times. It never happened before for the past few years until the encryption was set.
We have to manually connect to the router as the iPod Touch's wireless manager, Intel PROset (installed onto Window xp) and Window 7's wireless manager refuse to automatically connect. We have to repeatedly attempt to connect because the programs would say something like, "Cannot connect". Rebooting the computers and the router didn't help.
I also turned on Extended Range Mode but it didn't help The connection drops even when the wireless signal is at max strength. I haven't updated the firmware because it only fixed a packet size bug, and I'm not sure if it's related to the connection drops.
I have a similar issue however if I unplug the power from the router and plug it back in everything connects again. It seems to do it at random but it's at least a couple of times a day, almost as if it's timing out. Not trying to thread-jack you, just not sure this warrents another new thread created. Maybe the solution will be the same for both of us . . .?
No luck completely removing power and plugging it back in?