WIFI problems solved with D-Link USB WIFI adapter...
So I bought a D-Link DWA-125 USB wireless adapter and installed drivers from Ralink ( http://www.ralinktech.com/support.php?s=3) and it pretty much solves the issue.
I don't know what further proof Apple needs that this is a problem with the Air and not the internet/router/etc. It's rather comical that I have to use an ugly old USB adapter to get a brand new Macbook Air to connect to internet in my own home.
Macbook Air 13", Mac OS X (10.6.6)