I'd apply NOW. I know several people applying for green cards/citizenship (my wife included) that have been waiting for well over 1.5 years for responses from the INS. They are severly backlogged, especially since 9/11.

Yep. At this point my application to remove the conditional status on my permanent residency has been lost in the system for 16months. My green card expired 14 months ago, and the 12 month extension letter that they sent me has itself expired. This is security in action for you. Supposedly I can go to my nearest INS center and get my passport stamped to further officially extend it, but so far I've been unable to muster the motivation required to sit in line hell for 4 hours. What is really gruelling is the fact that they don't even seem able to put out a circular mailing to keep people updated. I'm sure that their phone system and offices would be far more efficient if they weren't being clogged by people like me just trying to find out what they need to do next in order to remain legal.

It's a joke.