I have upgraded from a BT HomeHub (v1?) to the new HomeHub3, with the promise of faster speeds and less interference. Unfortunately, several of my devices won't connect for more than a few minutes before disconnecting. This particularly applies to 2 Logitech Squeezebox Radios, and 2 (new) Samsung LED internet enabled TVs. I have tried various settings including WEP, b/g but it makes no difference.
I've had to go back to my old Homehub which is working fine, but won't be able to support infinity when it arrives next month.
Now I'm considering connecting the 2 hubs together with the old one for Wifi and the new one for everything else, but this is obviously crazy. Getting BT Vision next week, but now fully expecting that not to work either.
I had a similar problem, but with my Home Hub 2.
I ran inssider (http://www.metageek.net/products/inssider/) found a clear channel and set it to that.
This greatly improved things but not completely.
Anyhow the first thing I did when I got HH3 (and Infinity)..... I deselected the smart wireless and set it to this free/clear channel.
This seems to have completely cured the problem.
I also have the same problem with Home Hub3.
I've used inssider and found an unused channel but the wireless internet keeps dropping. The strange thing is that I can still browse other devices on my network using the wireless connection, just not the internet. And I know the internet connection is ok as I have had these problems whilst accessing the internet through a wired connection. Previously I had a netgear router from Sky and had no problems at all.
It appears to be even worse when using an iPod Touch or iPhone, I rarely seem to get a connection.
The only solution I've found so far is to disable wireless on the HH3 and to use my old Sky Netgear router for wireless. I've found disabling DHCP on the HH3 has also improved things.
Whilst trying different combinations of settings I did find deleting a device from the HH3 Home Network view enabled that device to access the Internet again, but doing that each there's a problem is not practical.
I've found the same issue as the OP, I have my HH2 setup for WIFI and the HH3 just for cable connections, using this guide - http://www.jarviser.co.uk/jarviser/repeaterhubswired.html.
I agree it is a crazy thing to do but at least the WIFI is stable and I can use Infinity, I will replace this combo with something decent when I can decide what to buy.