You don't need any kind of encryption on your wireless, be it WEP, WPA or WPA2. Each IP packet that your router sends needs to be encrypted before transmission and decrypted afterwards, which adds to the processing time (or latency) of your connection. That's why I don't use it.
Here's what I do instead:
1. Switch off SSID broadcasting in your router. You know when you need to connect to a wireless network for the first time, you need to scan for the network name? If someone tries that with your network when you have SSID broadcasting off, your network won't appear in the list of available ones.
2. Switch on MAC filtering. The MAC address is a unique hardware identifier assigned to every physical network interface device. This includes ethernet cards, wifi cards, etc. Most routers allow a whitelist or a blacklist. Pretty self-explanatory there - the blacklist prevents specific computers from accessing the network; the whitelist only allows specific computers on. Obviously you should use the whitelist. All you need to do to get a new piece of hardware onto the network is add its MAC address into the list of MACs allowed to connect.
Note that it is still possible to have your network hacked this way, but it's no more possible than just having WPA. Besides, when there are so many unsecured networks, who is going to bother trying to spoof a hardware address to gain access to a network they don't even know exists?
I use my PSP, phone, laptop, desktop and my girlfriend's DS on my wifi regularly.