Here is what I normally do to diagnose wireless internet problems.
Probably, you tried all these, but since I am not clear on what are things are tried and what problems are isolated, I am suggesting below steps.
It will also help us, if you can report back in which step below the dropping happens.
1. dissable all fancy stuff like dns caching (my instructions are not working
2. connect with ethernet cable via the router, try using the internet see if the connections are dropping. If yes then the router is not able to keep the connection with the ISP.
3. if above step succeeds, just change the connection type from wired to wireless and no other change. If your area is too crowded, I would just put mac filtering and no encryption. Adding mac filter will prevent others from using your connection. But be very careful that your mac is in the list. Now check if the connection is holding.
4. if above step drops connection, try changing the channel etc. and other suggestions provided here.
5. If any you are able to get a connection without dropping, enable the basic encryption. Probably WEP and key sharing.
6. If any you are able to get a connection without dropping, then you have solved most of the issues and you can try dns caching.