you have three choices:
the simplest and probably more expensive (but should also be far more compatible) is time capsule.
your second option, is getting one of those "expensive" router ($100) that have usb ports (just as the airport extreme), make sure it has the usb port and that is compatible with mac, not because its $100+ guarantee it will have the port. Then you can get yourself a regular external HDD 250GB ~ $70 (total project would cost you ~ $170-$200 depending on where you buy it and what brand.
The third and most flexible option you have (however this for sure will get your computer freeze once in a while, this is what I GOT, if you don't mind once in a while having to force quit this will give you more flexibility) is buying the Belkin Networked USB Hub, google it, it has 5 ports and it will connect to the router. your computer (and any other computer) can access to the USB devices wirelessly (assuming you got a wireless router, which you said you do.) The thing is mac drivers are not very stable and it will freeze once in a while. However it will let you connect (5 USB) HDDs, Printers, Scanners, flash memory (up to 16 connections, if you use hubs, however keep in mind some devices make use more than one "connection" such as multifunction printers once connection for scanner one for printer, I got one HDD dock that has card reader and usb hub, and it will use 4 connections) Also keep in mind that only 1 computer can connect to any device at once. (the hub is ~50 only ~90 retail, you going to need also the external HDD ~70 and you got already the router so it will cost you ~$150
I don't know for time machine, or wireless hubs with usb, but the belkin is not particularly fast (~2MB/s speeds, just enough to watch 720p HD movies off it but I don't recommend it for intensive work since transferring 1GB could take you easy half an hour....
) But that also approaches the price of the TC.