Should I Upgrade My Old Wireless Router?

If your router uses only WPA (Wi-Fi Protected Access) version 1, or worse WEP (Wired Equivalent Privacy), then yes, it is time to upgrade your wireless router to something that can do WPA2. Both of the earlier encryption protocols have known vulnerabilities. WEP can reportedly be cracked in 60 seconds (maybe less!)

I completely agree with @cwrea - if it only supports older, less secure protocols, it's time to upgrade.

You mention you're using WPA-PSK, which is version 1. The only reason not to upgrade to WPA2 is if some of your devices can't connect to it (e.g., My old Dell Axim PDA can't do past WPA).

If you aren't going to upgrade to an N router, I would recommend the Linksys WRT54GL router. I have one and they're a solid performer, and if you're into customization, you can load the Tomato Firmware or DD-WRT firmware onto the router and enable all kinds of super-advanced options like antenna power, etc. One of my favorite sites, Lifehacker, provided guides for using Tomato and DD-WRT.

If you're ready to go the N route (haha, route... router... get it?), Linksys has a multitude of sexy, fancy routers. I personally fancy the WRT160NL with StorageLink (a USB port for easy-as-pie network storage).