I have the 7202 router (F/W = 1.07) and have had the problems some of you describe in the past, notably dropping wireless connections and router lockups.
Firstly, the flaky wireless link problem is almost exclusively because of the wireless cards used in the client machines. I tried 3 different wireless cards, namely a DLink card (terrible, low signal even when PC right next to router), Netgear card (bad, constant link dropping), Mecer PCI 802.11G (okay, drivers difficult to find, but link more stable) and finally settled on a Gigabyte WP01GS card, which works flawlessly (the installation is also a breeze, unlike all of these other cards). I guess some wireless chipset vendor's interpretation of the wireless standards end up not being "totally" compatible.
Another thing to try, if you haven't already, is just try relocating the router to a different area - sometimes interference from other devices can cause interesting results.