N and WPA2 sounds right.
netgears are the easiest of routers to get to know and use, love 'em, even if I'm stuck with a Westell 7500 due to VZ DSL ... (hate port fwding on those babies)
If you give us the model number when you get home we can walk through any of it.
Kudos for using wifi analy to see if you have others on your channel! That can eliminate congestion as a possibility. Though I think you should just swap out the unit at this point.
That said though, I would check that the router is not set to be "N" only. I don't think the Droid can do "N", and unless you have otehr devices inthe residence that have "N" netcards, having it set on the router does nothing for you.
Som check that it is set to N and G at the very least.
Some people have had connection issues while hooking up to N networks. You may want to drop it to G to see if that fixes the connection issue.
I can't remember if WPA was also causing issues or not.
The first thing I would do is just to change the channel on the router and see if that fixes it.
Belkin routers do not like android. Don't know if you have a Belkin. If you are not willing to switch channels or even see why your router isn't playing nice with your android devices maybe you need to go back to an iPhone.
I too had a problem when I first got my Inc and it was a bad port on the router, don't know why it connected to EVERY other wifi device in the house but it was a bad router.
From the way you are describing your phone wont connect to anything wireless I agree take it back for exchange.
As far as your wife's not connecting to wifi, again it could be a simple channel change, could be anything.
IPhone is basically set up for those who don't or wont. Android is for the rest of us
Support Our Troops!! UltraKeyboarded from a wifi monolith.