I had a similar problem. 3G worked but wi-fi would hang forever in search. A little investigation showed that it had associated with the AP, but it didn't do DHCP (to get IP number etc.). Visiting the application manager again showed that it hadn't actually finished the upgrade, it had about half left. After that it went downhill, until my device died.

Just head for the flashing option directly, instead of trying to get the botched upgrade to finish. Right now it's difficult to get hold of the flasher tool and the image unless you have them already, because an important Nokia server is down.