I have a Linksys wrt54gs at the hotel I work at. On the average I have 25 wireless connections going at any one time. Never noticed any slow down.
The thing is not all are sending or receiving at the same time. I'd go with a setup like I have here. One main router connected to the modem and two access points. I use the TP-Link TL-WA501G access point. Half the cost of the Linksys range extenders and light years ahead of them. Just disable the dhcp in the access points and let the router do all the work. To set up the basic system I have was under 200 dollars US money.
You can get the TP-Link goodies at smaller computer shops or www.intrex.com