OK so my WRT160N v1 constantly dropped connection speed to 1.3Mbps and stays there even though my Wired connected computer clocked the connection at 20Mbps. Did firmware upgrade, factory defaults but no success. Contacted Linksys Customer Service but the no answer/help. Finally it turned out that latest firmware as of today 3/24/10 had bug in it.

I had heard of open source router firmware but never tried. So I googled it and found great open source router firmware: DD-WRT found at http://www.dd-wrt.com
Check if your router’s model is supported by this firmware and which firmware version to use at: http://www.dd-wrt.com/wiki/index.php/Supported_Devices
Follow the instructions there.
For my specific router, instruction was found on this page: http://www.dd-wrt.com/wiki/index.php/Linksys_WRT150N_%26_WRT160N
After flashing the firmware the problem solved and as a bonus my router now had many unsupported features that brandnames dont supply with their firmware. Like Custom bandwidth setting per IP address/computer, Hotspot setting for guests, Signal strength increase, etc. You’ll find out once you get in there. If you are not sure how to do it after reading tutorials, go to YouTube.