That option is purely for enhanced security.
Try having a look in the 'advanced' menus for more Wireless config, although it maybe something you can't configure - ie it 'should' drop to mixed mode if there are both 11b & 11g devices in range.
Have you tried using your phone with no other wireless devices active? Maybe the router is in 11g mode and can't drop down to 11b mode?
The manufacturers website is
http://safecom.cn/code/default.asp (according to the forum) but appears to be pants - no manuals or FAQ for that device !
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As Raistlin said - have you secured the network - MAC address filtering is the other one to look for.