New Router vs. WAP vs. Wireless Expander?

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I have a 6 year old Linksys WRT54G router. I use it for wired and wireless applications. I also use a switch for my wired devices. I am having some problem with range on the wireless side.. I wanted to get a WAP (Linksys WAP54G) and put it down stream (on my 1st floor) in my wired network to boost signal in the lower level of my house. The problem I see is that the WAP only has one wired connection point in the back. My plan was to use my existing wired connection and feed it through the WAP and then back out to my device ( kind of like using it as a switch/WAP) but it seems that I cannot do it this way because there is only one Ethernet connection on the back of the WAP. So it seems I should use the Linksys WRE54G wireless expander/repeater.

However, I was wondering if I should get a new router. Would a newer more advanced equipment have better range. Should I look into wireless N or stay with the G. If I went to N would I have to change the wireless cards in my devices? Or are the N routers backwards compatible?

So I guess the short version of my question is: To improve the performance and range of my network, should I get a newer router or a wireless expander?

Thanks in advance for your help.

the WAP is just designed to provide wireless access to a wired network.
You use the one port to connect the WAP to your router/switch, and also connect all the wired devices to your router/switch
So it would be:
router -> switch -> access point
access point <- router -> switch

If you're running custom firmware on your WRT54G (Tomato or DD-WRT) then I would probably keep the router there and just get an access point.

If you're only using the wireless connection to get internet access, there's probably no need for wireless N (unless you have a 100Mbit internet connection or faster which I doubt)
If you want to share files through the network wirelessly, wireless N may give you faster speeds there.
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