I feel your pain, as I've moaned about elsewhere on here I've had an awful experience with sub £200 routers recently. I'm still not very happy with the Draytek I ended up with.

I'd go with a separate WAP/modem/router (with the router being something Linux/BSD based), but even that is problematic. I tried a few affordable WAPs out and they all failed to cope in some way with dealing with my set of wifi clients:

2 x iPhone 3G
1 x Mac mini
2 x PC laptop
1 x Squeezebox Receiver
2 x Squeezebox Boom
1 x Squeezebox Controller

Some of them just failed to deal with that mixture of clients completely (randomly dropping them off the network), some failed to pass DHCP messages, some would lock up randomly. The Draytek is at least coping with the wifi side of things, now that I've handed the DHCP duties to the Linux server (the Draytek couldn't cope with being a DHCP server for some reason).