By
...N style connection...
you mean connectivity over 54 Mbps.
At 1-2 feet, I would say
APC or refrigerator near by.
possibly a cordless phone or
May be just too close for a multiple path.
Or b/g interference
Not using 1.02 firmware
may be you aren't using WPA2 encryption.
Please provide details of your network and components, including configuration.