There is another thread on this topic:
http://discussions.apple.com/thread.jspa?messageID=10780662
I just posted the following:
This has turned into a real fiasco. I upgraded to the new time capsule. All the Macs in my house are running 10.6.2, except for an iMac G5 which runs Tiger. The G5 immediately started experiencing kernel panics after I installed the new time capsule. I couldn't imagine it had anything to do with the new Time Capsule, so this morning I brought the iMac G5 to the genius bar. It worked fine there, and the tech didn't think it had anything to do with the new Time Capsule either. Back home, and I had kernel panics again. I check the forums, and sure enough there is an issue between the new dual band Time Capsules and 10.4 Tiger.Apparently the answer is to upgrade the machine to Leopard.
I have a family pack, totally legit, copy of Leopard, so I attempt to install that on the G5 iMac. No dice: keeps telling me the "media is damaged". Back to the forums, sure enough, there's an issue installing Leopard on some older G5's. Som say it's an issue with 3rd party RAM (which I do have), others say it's an issue with the DVD reader in the older G5 iMacs. So now the iMac won't even boot up; I'm guessing because it has a half completed Leopard installation. I would try installing using the super drive in one of my other Macs via target mode, but they have two different types of firewire plugs. Even if I got the correct cable, I'm not sure that would work.
On top of all this, the "genius" at the Apple store said they don't even service these G5's anymore, because they are over 5 years old and now considered "legacy" machines. So now I have one heck of a paper weight! Any ideas?