Same issue for me: I have a Digicom USB Wave 54 dongle, that uses the zd1211rw 
driver, on Ubuntu 9.10 i386.
Even if my AP is just a meter away and in the line of sight, iwconfig reports 
around 40/100 signal and 1 Mb/s rate.

BUT, it is actually going faster than this, because doing an ADSL speed
test (like www.speedtest.net) it reports correctly my ADSL line speed
(around 7 Mb/s), so the reported "1 Mb/s" speed is obviously wrong.

This appears to be a quite common issue, see
http://art.ubuntuforums.org/showthread.php?t=1309703

-- 
network-manager-gnome reports incorrect wireless rate of 1Mb/s for 54Mb/s 
capable zd1211rw based card
https://bugs.launchpad.net/bugs/477212
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