I want to confirm what Mr Mephisto has been saying and think his guide is VERY good.
Step 2, 3 and 6 are something you NEVER skip.
Step 5 and 4 is to go an extra mile, and you do it if you like and care to fiddle with it.
Step 1 is for me that on your home network you MUST set it to one of the variants of WEP-64, WEP-128 or WPA. But as long as you don't run without you are probably fine. That said, they are just as easy to turn on so you choose the best that all your equipment can do. I have been tought that your net is only as secure as your weakest link. So if you mix (wich you can) WPA with WEP your net is only WEP secure.
Why security:
I live in a city, and all around me are networks with nothing of this done. This means, for you who are new to this, that I could select to connect to internet through the one of those that has the fastest internet connection. And there is no hacking involved at all. I could skip to pay for connection myself. Actually when I bought my stuff and installed it, my PC connected not to my AP but to some neighbors. This is done automatically. And it is not only about someone using your internet connection. Since the AP is unprotected I can log in to my neighbors router and configure it. I could mess it up and then change the password, which he never did himslef. I can even turn on remote administration of the router and let anyone of you guys log in to it from where you are. Scary!
Since the lack of security is widespread I think the risk of someone trying to hack your 128-bit key is rather small. It does exist but so does plane crashes. People drive around for fun with laptops in their car and use open networks. They don't need to hack the secure ones.
So follow Mr Mephisto's excellent guide and if you do not have support for WPA then use WEP and you can sleep well.
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