Ick. You have three neighbors using HT40 in 2.4GHz. Meaning they are taking up all available channels (two are taking up ch 1 + 6 and one is taking channels 11 + 6). But the good news is they are seen at fairly weak signal stregnths.
I would definited stay on channel 11.
Now if your WiFi icon is staying black, I am willing to be your wireless link is not dropping. Here is how you can prove it.
Open two terminal windows (we will call them A and B).
In termianl A you want to ping your Linksys router (it shows up as the default gateway on your Mac, usually 192.168.1.X). If you router's address is 192.168.1.1 the command would look like this:
ping 192.168.1.1
You should see ping replies coming back from your router.
In terminal B, ping a dns name, like this:
ping www.google.com
again you should see replies coming back.
Go ahead and use your Mac as usual with the two ping commands running. Once you get into trouble where you cannot browse, check mail, etc. go back and look at the two ping windows.
If the ping in terminal A is still getting replies, but terminal B is not, then that means your wireless link is good to your Linksys router and the problem lies some where beyond your Linksys router and your internet modem (time to call your ISP).
If the pings in terminal A and B are working, but apps like Safari, mail, etc are not work, then that sounds like a stack issue.
If both pings are failing, then it might be a wireless link issue.
Give that a try.