The placement of your router matters a great deal as well. Even if you're in the same room as it, if it's not placed in a good spot, you'll still have really annoying issues such as this, for example.
Make sure it's away from any cordless phones, microwaves, metal objects/walls and walls in general, basically anything that emits radio signals and that could interfere with it.
It's best to have the router as high up as you can get it... the higher up, the better and stronger signal you'll have from farther away.
Since we don't know what your router is... consider figuring out what signal it's operating on (2.4 GHz or 5 GHz, the latter only available with N-routers). 5 GHz is fast (and also helps combat the interferences like cordless phones and microwaves) and is great for areas where there's not many obstructions, but if there's a lot of obstructions near the router, you'll get a lot of signal drops. If it's 2.4 GHz, you should have much wider range of signal and a more stable connection, as long as the router isn't heavily obstructed. More information on this:
http://www.pcworld.com/article/145098/new_80211n_routers_the_best_wifi_yet.html
Consider checking your channels as well... here's more information on the subject:
http://compnetworking.about.com/od/wifihomenetworking/qt/wifichannel.htm
Sometimes old routers start to give out after so long. My 2003 2Wire router gave out last year (the signal started getting really bad and dropping the connection and finally stopped transmitting wirelessly completely). I bought a Time Capsule about a month ago and an Airport Extreme last year (my house is really long and has a lot of walls.... and I'm in both extremes of the house, where I need signal.) and it has made all the difference with dual band and the ability to extend the network.