Iphone 3GS has "169..." IP address after replacing old Airport Express

My 3GS is no longer connecting to my home network after replacing my old airport express.
Previously my old G5 iMac would have problems connecting to the old airport express, BUT my iPhone 3GS would reliably connect.
After installing this new airport express, my iMac is on the network, but NOW my iPhone 3GS is experiencing the same problem my iMac previously had: IP address changed to 169.254.205.191
Airport Express is set to WPA2 Personal
Updated firmware on the Airport express
Network settings on iphone have been reset several times.
Airport express has been rebooted several times.
Please help. Thank you.

Thnx William but that is not the case coz all other devices(laptops, desktops, PS3...etc) r working just fine.
after alot of time trying to figure out what the problem is I figured out the problem but cant seem to sove it:
I have three router in my network one acts as a DHCP server (router 1) and the others act as AP, they all brodcast wirless (SSID) based on the internet connection coming from router 1, all devices including my old iphone 3g connect on all three router no problem and get assigned an ip address within range 192.168.1.~, however when i connect my 3gs to router 1 (DHCP) it works perfectly and connects to the internet but when I connect to any of the other routers I cannot have internet access and it takes a long time to show the wi-fi symbol (3 bars), I managed to overcome this by giving my second router another network IP i.e 192.168.2.~ and made it aother DHCP server (but another network) that way my 3gs connected just fine like the 1st router, the problem with this solution is that I am on two seperate networks but same internet feed so I cannot communicate between lapto, desktop, PS3...etc
I guess I have two options:
1- wait for an update for 3gs hoping this could be solved and keep my network as is.
2- assign three different networks just for 3gs to work and sacrifice my whole home sharing.
SOOOO Pleaseeeeee if anything know anything or could help me in anyway please and post, is it just me or have i heared alot of Wi-Fi problems with 3gs!!!

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