WiFi no longer working with new Time Capsule-can you help please?

Hi all,
Just received my new Time Capsule (TC). It was a little problematic setting up, but probably due to my now choosing to increase my security from WEP to WPA as the TC set-up assistant suggests. Since then, I have had numerous problems getting my other computers and now my iPhone to connect with WiFi.
The problem is that despite entering all the new settings and WPA passwords for my connection with the TC, the iPhone will either momentarily recognize and go to wifi or simply stay on Edge.
On the former, with wifi active, as soon as I go to iTunes, Safari or check email, it reverts to Edge. On the latter, despite resetting, entering password, or tapping Settings and selecting my wifi connection, it will NOT connect and stays on Edge.
(Now, I'm on Edge! I'm bummed that with new hardware I have new problems that didn't exist before!)
Can someone who had this same problem tell me how they resolved it.
Here's the one clue I have, but would rather not resort to: When I first set up the TC, I had it on WEP with a WDS Network, and everything was working great and FAST! Now that I have increased the security—I will be backing up 3 computers to the TC—my iPhone and other computers seem to have intermittent or no wifi connection as a result.)

Irving Gonzales,
If your computers are 802.11N capable, you might want to try an advanced setup that might help your Time Machine speeds some. I have not personally tested it, so it is just a personal theory at this point.
First, in a mixed environment the 802.11N clients all get slowed down.
First, configure the TC for 802.11N only.
Second, connect the Airport Express via ethernet to the Time Capsule
Third, configure the Airport Express for bridged mode (doesn't give out IP addresses), and for its own wireless network with a different name than the Time Capsule.
Have any 802.11b/g clients like the iPhone join the Airport Express' network.
Thank you,
Nathan C.

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