The router supports four different types of security settings for your network. Wi-Fi Protected Access (WPA) Pre-Shared key, WPA Remote Access Dial In User Service (RADIUS), RADIUS, and Wire Equivalence Protection (WEP).
The Sveasoft WRT54G firmware includes support for several different wireless encryption schemes. Your choice will depend on the modernity of your client hardware and software, and your concern about security and/or the easy ability to allow roaming access.
WEP is the oldest and best supported "wireline" encryption available for 802.11b/g. Unfortunately, WEP is hideously insecure. Unless you change keys very frequently, it can be cracked quickly. However, many older 802.11 cards don't support anything but WEP. If this applies to you, you can buy a new card ot use WEP. For a discussion about some WPA-upgradable cards, see
http://wifinetnews.com/archives/002875.html. ADD NOTE ABOUT WEP RADIUS SUPPORT HERE?
WPA (pre-shared key and RADIUS) are newer attempts to secure wireless communication. Many new cards support this encryption, and it is generally considered to be a step up from WEP, although it is still susceptible to some forms of attack. WPA also adds support for more sophisticated, RADIUS-based, authentication, although it is unlikely that many home users will spend the time to configure the software necessary to support it. See
http://www.hackfaq.org/wireless-networks/wpa-wi-fi-protected-access.shtml for more discussion.
Because your Internet traffic is transmitted to anyone within range who cares to listen, it is always a better idea to use application-level encryption when communicating sensitive data (SSL, SSH, etc). Also remember, the more security you add, the harder time your authorized visiting users will have configuring it.
One page links to SV-Wireless-Security: