I can confirm this issue in Gutsy Beta, brought up to date today.
  If I try to connect mine laptop, the whole system hangs and the computer 
needs a hardreboot.
he only functions with ethernet normal with wire.

lspci: 00:0d.0 Network controller: RaLink RT2561/RT61 rev B 802.11g

this happened in the 7.04, but it stopped to give error when the package 
linux-386.deb installed.
But in the 7.10 this does not solve nothing.

sorry for my poor english I am Brazilian

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bug wifi rt61 gutsy
https://bugs.launchpad.net/bugs/144239
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