Hmm, I honestly don't know if this is a software issue. I'm honestly thinking it's a hardware issue and the fact that some of the ipad radio's are indeed defective.
I've never had any issues with Wifi with my ipad. I can go to just about any Wifi hotspot (Starbucks, Cosi's, someone's house, ski resort) and connect without having any disconnect issues. I've never had my iPad just disconnect randomly.
WEP, WPA. Doesn't make a difference.
Youtube on the other hand.... ughhh.