N and WPA2 sounds right.
netgears are the easiest of routers to get to know and use, love 'em, even if I'm stuck with a Westell 7500 due to VZ DSL ... (hate port fwding on those babies)
If you give us the model number when you get home we can walk through any of it.
Kudos for using wifi analy to see if you have others on your channel! That can eliminate congestion as a possibility. Though I think you should just swap out the unit at this point.
That said though, I would check that the router is not set to be "N" only. I don't think the Droid can do "N", and unless you have otehr devices inthe residence that have "N" netcards, having it set on the router does nothing for you.
Som check that it is set to N and G at the very least.