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Wireless security encryption can use precious CPU cycles on your router that are otherwise not in use. High CPU usage on your router can cause all sorts of strange issues, including dropped packets (which would cause higher than normal latency). Cheap routers generally run poorly with more than a couple wireless clients for this reason.
However, there are a few things you can do about it, short of simply buying a better router.
use WPA encryption over the more secure WPA2 encryption, while this is a little less secure, it's similar to removing one of your 3 deadbolts from your front door...
Disable the router's built-in "SPI firewall" if it has such an option. Again, it will lower your security a small fraction, but will free up precious CPU cycles.
I've found that, especially with certain brands *cough*belkin*cough* the SPI firewall causes "dead link" style connection loss if the router hasnt been powercycled in a while.
Besides being inherently less secure, a wireless connection will use more CPU cycles to transmit the same amount of data than a typical wired connection simply because of the encoding/decoding necessary for the encryption and whatnot..
TL;DR - wired is -always- your preferred option unless it isnt feasible, or restricts mobility.
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