Tech site Ars Technica runs down the basics of securing your home wireless network with the most secure and up-to-date methods. The main takeaway is that when you enable encryption on your wireless router, use WPA encryption instead of WEP, because it's better and stronger.
Unlike WEP, WPA uses a 48-bit initialization vector and a 128-bit encryption key. More importantly, however, WPA uses what's called the Temporary Key Integrity Protocol (TKIP). Whereas WEP recycles the same key for encrypting all the packets flowing across the network, WPA's TKIP changes the encryption key every single time a packet is transmitted. This, combined with the use of longer keys, prevents a hacker from compromising a router simply by passively observing a large enough set of packet transmissions.
Ars lists common home network hardware—from an Xbox 360 to a Wii to an iPhone—and the various protocols they support. Luckily, most do speak WPA.
The ABCs of securing your wireless network [Ars Technica]