ozcaddy, ok, if there is only one other WLAN that you can see you do not have to worry about interference. This is mostly a problem if you have like five or more WLANs in the same channel.
And it is better to set channel manual, not using auto, reason why is that the 2.4Ghz band only has ch1, ch6 and ch11 (they do not overlap). Check wikipedia for more info if you need to.
So 2.4Gh is great, works for all hardware, not to speedy but works. For uplinks, or point to point things, 5Ghz band should be used, more speed, a lot less interference. However if you are in a area with there are few WLANs etc. Out in the countryside or something 2.4Ghz can be use for p2p, uplink too, no problem.
Good that you upgraded to 3.04, it is a must, you should have no problems with drops, or disconnect now.