Bushfiva,
I agree overall with what you say - however, I don't believe that the impact of encryption is quite as high as you suggest.
The most resource-intensive is WPA, followed by WEP, then WPA2. The last is best, mainly because the spec. calls for the encryption to be done at a hardware level.
I would also suspect firmware and driver issues - both at the router and the NIC.
Possibly also worth checking that the connection is to the right wifi network!
SD