@William Thank you.

But i got a bad news, after solving this wifi problem, i installed the 
propitiatory nvidia driver. 
sudo apt-get install nvidia-current
after installing nvidia-current the wifi doesn't connect. It remains in 
"connecting" state for long time then ask for WEP password again, (same 
password, saved before). then again  "connecting". doesn't connect.
Then i tried adding nvidia.modeset=0 nomodeset to kernel flags. It doesn't help 
:(

Now if i put my laptop to suspend, then resume after sometime, the wifi
connects then. but the speed has dropped again. Not as worst as
previous, the speed has decreased :(

I can't realize why it is conflicting with graphics driver :O , but #327
also tells the same things for ati card.

I tried re-compiling iwl3945 module (compat-wireless-2011-03-18). Didn't help.
I'll try  compat-wireless-2011-03-29 shortly, will post update then. Any other 
idea guys ?

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https://bugs.launchpad.net/bugs/621265

Title:
  Slow Wireless Connection in Intel 3945abg

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