I recently purchased a new Torch and was having the same sort of issues with intermittent wifi connectivity. It would connect and then after about a minute it would stop responding - although it was still connected. I have a Cisco/Linksys WAP4410N access point. I had to do 2 things in order to finally get a stable wifi connection. First, I had to choose wireless channel 1, 6, or 11. It was originally set to auto and was choosing channel 2. The second thing I had to do was change the guard interval. On my AP, it is set to auto by default. Once I manually set it to "Short (400)", my wifi connections were as solid as a rock. This is what worked for me. Hopefully it may help those whoe are still having issues.
By the way, if I changed either of the 2 settings (wireless channel and guard interval), the instability came back. When I manually set the guard interval to "Long (800), it seemed to work for a while but I still got the "unable to locate server" error messages after a while. Therefore, for my set up, those had to be configured as described above for it to work on my LAN. Also by the way, my wireless LAN is configured for "N" only. Your mileage may vary.