I have WRT54G too and had same symptoms too but no more. Done following:
- found that 770's WLAN has no droppings if 770 is nearer than 2 meters from WRT54G. (Unfortunately I don't remember all the Mode settings I tried.)
- updated WRT54G's firmware but no improvements
- updated 770's Nokia software: WLAN frequent droppings disappeared
- but there is still limitation: droppings appear if I use "G-only" setting to WRT54G Network Mode and disappear if I use "Mixed" setting. This means that 770 uses B-mode instead of G-mode which thus seems to be too fast for 770. But no worry, B-mode is 11 Mbps (G: 54 Mbps) and good broadband is e.g. 1 Mbps, so the bottle neck of bitrate from Internet is the broadband.