The first thing I wanted to do was install a firewall. I bought a Linksys BEFSX41 which I had to return after rebooting it every 20 minutes. The firewall I'm now happy with is an Asante FR1004. I would recommend it. The ethernet out from the DSL modem goes into the firewall. I've got one output from the firewall that provides the "uplink" to my switch.
The backbone of my house network is the 24-port switch. I got an Extreme Networks Summit24e3 used for a good price. It works like a dream. The fans, however, are a bit loud for residential use. I've got all the active ports throughout the house patched into the switch, which I run in pure L2 mode (no TCP/IP features).
One additional item plugged into the switch is an Apple Airport Extreme Base Station. I run this in "bridge mode" by connecting to the LAN port only. This disables all the NAT/router stuff that the AEBS can do. It would duplicate what the FR1004 does in my setup. My wife's iBook roams the house and yard quite happily. Since my firewall also does DCHP, people who come to visit just need to log in to the network. For me, the 128-bit WEP seems good enough.