IMac :: IStumbler Shows Router - Airport Won't Connect

My airport connection to the wireless router has, over the last few days, been becoming increasingly flaky and intermittent followed last night by a total refusal to connect. It had been working fine for at least a year up until recently. The funny thing is that iStumbler finds my router(as well as some neighbours'), and reports a signal strength similar to what I have always had. Problems started as follows: iMac would show full bars, then no bars and then full again, followed by a slow drop to nothing. Turning airport off and back on again, would repeat this process. Occasionally, the iMac would also require the WPA2 password. And progressed to: Over a few days things got worse to the point that I had no usable connection and the airport would not always pick up any networks and would request the WPA2 password repeatedly always followed by a 'Connection timeout'.I would say that the airport extreme card is broken, except iStumbler is reporting 'normal' service. Also, my iPhone reports full signal strength sitting next to the iMac! Can anyone shed some light on this? Typically, Applecare expired all of 2 weeks ago.