A quick google search yielded an interesting hit. Although not exactly your issue, it does involve your router and some Sony hardware trying to connect wireless. It involves using a static setup on a PS3, while including the uPnP options that like to automatically do that setup. Check it out here.
There's also a thread on Sony's site that seems to be your issue, fairly exactly, though a different router. A firmware update on the router seemed to fix their issue. Check it out here.
One way or another, you're just having a conflict somewhere with settings between the two devices.
If you don't have a bunch of custom configuration on the router, I'd recommend first updating the firmware, and then restore to factory defaults. See if you have the issue with a clean slate.
What do you mean by "drops all connections"? Do you mean wireless clients no longer detect a wireless network? – David Schwartz – 2012-05-19T05:27:36.280
@david-schwartz, I think so. It disconnects both laptops and the phone before restarting itself.
Sorry, don't think I used the term right ;^_^ – silversy – 2012-05-20T01:07:13.077
Do you have the latest firmware? If not, update. If so, try switching to Tomato or ddWRT. – Mahmoud Al-Qudsi – 2012-05-20T04:45:34.000