I don't recommend the use of WEP, which is easily cracked. Instead, use Wireless Protected Access (WPA) or the newer WPA2 based on the 802.11i security standard. WPA adds rotating keys to WEP, eliminating the obvious vulnerability, and WPA2 is based on an entirely different security standard, AES. WPA2 may require new hardware, however. Regardless, the use of a VPN like IPsec, or other upper-layer security mechanism is always recommended,...
because it allows security to be end-to-end. WLAN security of any form only secures the airlink, and thus does not address the non-WLAN portions of your network. Finally, the use of strong authentication based on 802.1X or similar is recommended. I personally use two-factor authentication which includes a hardware token, as well as 1024-bit end-to-end encryption. But, then, I'm just a little paranoid...
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