Some of my colleagues use DD-WRT on their Linksys WRT-54GL's, saying that it's more stable than the Linksys "OS", and there is more control on WI-FI settings. However, this information is anecdotal. ( I use a D-Link DIR-655)
Security settings should always be the highest encryption possible, WPA2-PSK, with a very long passphrase, with a combination of upper and lower case letters, misspelled words and numbers. If you're experiencing WI-FI drop-outs, it's not because of the encryption. It could be interference from older cordless phones.
Do you or your neighbours use the older 2.4GHz cordless phones? That's the first suspect. If you do have cordless phones in that frequency range, go to Costco and get the newer DECT 6.0 sets, they will not interfere with WI-FI. If your neighbours use the older cordless sets, maybe you'd like to "help" them upgrade?
As for DHCP or static. There's nothing wrong with DHCP, you can also reserve IP addresses with DHCP enabled, which means that no matter how long the client PC/device is off, every time it reboots, it'll always get the same IP address.
If you still want to use static IP addresses, you'll need to set your gateway and DNS settings.
The easiest DNS setting is the router (also the gateway). The router will "route" DNS requests to your main ISP's DNS servers. But I have a suggestion that might speed things up. Use OpenDNS, it's very fast and FREE! There are two ways to set up for OpenDNS. You can either point each of your devices to the OpenDNS servers or you can still point your devices to the router and have your router point to the OpenDNS servers (primary = 184.108.40.206 secondary = 220.127.116.11)
Just try OpenDNS and you'll see how fast new pages load.
On another, related note. For people that are new to home networking, and don't want to take courses on networking to be able to set up their home network, I have a suggestion for a good "How-to" book.
Home Networking Simplified
by Cisco. The link (if approved by the moderator) will bring you to Amazon.ca where you can purchase the book for about twenty bucks. It's written in plain English, and will help you get your home network running smoothly in no time.