Turns out the milestone doesn't play well with newer models of wireless routers that use AEP authentication. Apparantly the milestone will sometimes send some inappropriate data to the router, which AEP authentication feels is a nono and so boots the device off the network until you manually reconnect. That's my understanding anyway.
The fix for me was to change my router encryption from WPA2-PSK to WPA-PSK (I have a siemens router supplied by Orcon). Since I've made the changes a few days ago I haven't had a single drop out. Hope it works for you too.
On another note, the 2.1 update was great, mostly because of updates to the camera interface and response times. Fingers crossed for more nice surprises in 2.2