Need advice on airport set up (home network)

hi all,
i am just wondering what the best set up would be for my home network, listed below are what i have set up, and what i think could be the best setup
i have an office upstairs which contains:
-ADSL2 modem
-iMac 802.11n
-PC wired
-printer
-750GB LaCie HDD
i have my lounge room which is downstairs and almost below the office. (in case it matters) the office is above my garage – which is next to my lounge room. so the airport will be going through the floor & my brick garage wall.
in my lounge i have:
-macbook 802.11n
-iphone x 2 802.11g
-xbox 360 (currently have wireless adapter but i think ill sell it due to speed/depending on the setup i go with)
i am concerned because i need to have the network G for my iphones and depending on how i set up my 360.
i want to stream HD media to my 360 from my imac (through connect 360) and i have not been able to watch it yet as i lag every 30-40 seconds watching lost in HD. (that was using the faulty netgear DG834N modem/router which i have just sent back to netgear/supplier for a refund).
now after discovering i can use an apple airport extreme and express together i figured i could do either one of two things:
-have an extreme wired to the 360 downstairs( utilizing really only 1 port), have the HDD connected to the extreme (i figure if its connected via ethernet to the extreme, even though the imac is wireless, being connected to the source (extreme + hdd) i shouldn't get lag watching HD or using the 360 online.
Then the express is upstairs in the office where the modem plugs into the express and the express shares the network to the extreme.
now with this method i figure i can have an 802.11n (b/g compatible) network and all my devices can run off it. (don't need pure N as the 360 is connected via ethernet)
because the printer is in the office i would set the printer up to be shared via the imac and the laptop could just use the shared printer (i don't print too often). id prolly have to buy a wireless adapter for the dell but i could also share the network via ethernet to from the imac.
the 2nd:
- the extreme is upstairs with the modem connecting to the imac, PC, HDD and printer wired.
the airport express is downstairs with the xbox 360 (im assuming the ethernet port can send info and not just receive packets). this way the modems are linked up and (i hope) the network is running at 5Ghz so its fastest possible for streaming HD/SD media.
running this method i would need to set the imac up to host a G network for the iphones as they don't support N.
the laptop can connect wirelessly.
now i have only just discovered you can make a WDS using an extreme and express. so im sorry if ive gotten anything wrong, i have been using my netgear router and to date it has SUCKED!
a couple of questions:
is the express slower than the extreme, does it have gigabit ethernet and is the express going to lag being rougly 2 walls, 8-10 metres (in a direct line) from the express?
if i were just to keep my current xbox 360 wireless device, would it suffice for streaming SD/HD media?
now i am looking in the future at getting another hard drive (500-750GB) would i be best to get a time capsule or just sticking with the extreme? can the time capsule rout/network as good as the extreme?
and now, for my final question, i have a friend 10 townhouses, 5-6 real houses down (if i had to guess he'd be 100 metres from my place). if he were to get an extreme, could he use my internet/connect to my network?
i appreciate anyone helping me, i know its a long read but i just don't want to overdo it, also i don't want to be lagged if i feel like playing some multiplayer halo3/GTA IV or want to watch HD/SD media.
thanks guys

-have an extreme wired to the 360 downstairs( utilizing really only 1 port), have the HDD connected to the extreme (i figure if its connected via ethernet to the extreme, even though the imac is wireless, being connected to the source (extreme + hdd) i shouldn't get lag watching HD or using the 360 online.
Then the express is upstairs in the office where the modem plugs into the express and the express shares the network to the extreme.
now with this method i figure i can have an 802.11n (b/g compatible) network and all my devices can run off it. (don't need pure N as the 360 is connected via ethernet)
because the printer is in the office i would set the printer up to be shared via the imac and the laptop could just use the shared printer (i don't print too often). id prolly have to buy a wireless adapter for the dell but i could also share the network via ethernet to from the imac.
That is a possibility. However you may find that the wireless signal can not penetrate the 2 walls and still be usable. You will only know by trying it.
the 2nd:
* the extreme is upstairs with the modem connecting to the imac, PC, HDD and printer wired.
the airport express is downstairs with the xbox 360 (im assuming the ethernet port can send info and not just receive packets). this way the modems are linked up and (i hope) the network is running at 5Ghz so its fastest possible for streaming HD/SD media.
running this method i would need to set the imac up to host a G network for the iphones as they don't support N.
the laptop can connect wirelessly.
The iMac would NOT be able to host a G network of the iPhone. The iMac would need to be connected wirelessly to the signal provided by the AirPort Extreme base station (AEBS). It can't connect to a wireless network as a client AND host a wireless network at the same time.

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