I finally found a fix, and it was in a different forum:
https://discussions.apple.com/thread/3704573?start=90&tstart=0
I will repost it here:
FrameThought
For What it is Worth
I had experienced wifi drop problems after updating to 10.7.2, late last year. It was really frustrating few weeks, which lead to a frantic search for solutions.
I had found an answer in the following link, which I had used. It was successful, and I never faced wifi drop problem again.
Two weeks back, my imac auto updated to 10.7.3, and wifi drop problems resurfaced again. Initially I didn't realize it was related to the update. However, once I thought it could be, I searched and found that the wifi drop problem is again happening with 10.7.3
Luckily, I had bookmarked the link, and had the local copy of the details of the earlier fix.
I tried the same with 10.7.3, and to my great relief it works.
No wifi drop after this fix applied on top of 10.7.3
My system is 27 inch imac, late 2009 model.
I credit all the thanks to the original contributor of the fix in the link.
As I have seen so many frustrated users venting their ire with respect to this problem in this forum, I want to share my experience and a possible solution/workaround.
Please try and share your experience with this approach.
http://rys.pixeltards.com/2011/09/04/osx-lion-wifi.html
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From me:
I went to that link and downloaded the file, followed the instructions, and now I have been going 24 hours strong - the wifi only dropped once instead of every 5 minutes. Although its not perfect, and Apple majorly let me down, this works for now, I'm no longer going crazy.
I might also add that on 2/24/12 Apple released a Wifi update: http://support.apple.com/kb/DL1501?viewlocale=en_US that addresses an issue with wifi dropping during sleep/wake (different from my issue). After I followed the advice above, I noticed that my wifi doesn't drop anymore, except for when my computer goes to sleep, then wakes up. In that case, all I do is turn off my wifi, then turn it back on, and I'm connected. No further drops. I can live with that for now. I will try to reinstall apple's wifi update to see if that solves the problem. Any advice is welcome.
Thanks & Good Luck.