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You may find that putting the PS3 into the routers DMZ will help with connection issues.
@ WWE you can delete the game data (not game saves) of games you don't play often to gain more space, it will mean going thru installation again when you play, or just upgrade the HDD
6 people using a wireless 54mb connection at the same time. You do relise that your upload speed (which is not 20mb and which is most important when online gaming is being shared between 6 connections.
I think from what an earlier poster said - too much being used at once.
Perhaps are better router such as the wireless n gaming ones (these seemingly run at 300mb LAN and are up to these tasks). I would even look into thresholding the connection and making sure all the relvant ports on the router are open.