The same problem here. I work for a high-school in Warsaw, Poland. We
have more than 20 laptops with ASUS rt2500-based PCI cards we use in
classrooms. In previous Ubuntu versions, at least since 6.06 our WiFi
cards worked great. But after upgrading to Gutsy WiFi stopped working
properly.

The Network Manager shows all the available networks, but when we try to
connect, at least to our WPA-protected (TKIP) network, it asks for the
key and than tries to connect for about 30 seconds, but than fails.

The lspci information for the card is:
07:00.0 Network controller [0280]: RaLink RT2500 802.11g Cardbus/mini-PCI 
[1814:0201] (rev 01)

There are some instructions in Ubuntu Forums that includes disabling the 
default driver shipped with 7.10 and compiling rt2x00.serialmonkey.com driver, 
but I haven't tried it yet:
http://ubuntuforums.org/showthread.php?t=584657

-- 
rt2500: network-manager fails to join wireless networks
https://bugs.launchpad.net/bugs/134962
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