My WG111v2 has similar low signal strength ~23% at 1.5 feet from the router.
running Jaunty 2.6.28-17 kernel
NetworkManager Applet 0.7.0.100

I ran a speed test from http://speedtest.net/ and from 
http://www.speakeasy.net/speedtest/ and both seemed to show normal performance 
for my ISP plan.
Also, I noticed the status light on the WG111v2 dongal only flashes once at 
start-up and is otherwise dark.

I installed Netgear drivers in XP VirtualBox (would not run in WINE) and signal 
strength was at ~98%.
The status light on the WG111v2 shown bright blue as the manual said it should 
be.

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RTL8187 wireless driver disconnects ( Wg111v2 in Hardy ) 
https://bugs.launchpad.net/bugs/225851
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