Wireless Network proximity problems

When I bought my ipod touch earlier today, it detected my network just fine in the upstairs of my home but I couldn't remember my password. I reset the the router and changed the password (my router is based downstairs), and now my ipod touch can only detect the network if I'm sitting within two or three feet of my router. I can extend my arm away from the router and totally lose the signal. Is there a specific encryption that's best? I'm currently using WPA and the computer upstairs (where my ipod was initially able to detect the original network) works fine.

Since it does work in close proximity to the router, is this an iPod issue or an encryption issue?

Any help would be greatly appreciated!