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I might not be right about this, so don't flame me but. . .
What you are doing is breaking up a connection when you have one router. That is why you can run 4 different stuff, you are just breaking the connection into four ways. This is why if you have just your PS2 on, you don't lag much, when your sister is running a computer or two along with your PS2, you have problems. Thats what is happening here. I am guessing that this wireless has 4 ports, even though it is likely that it is only 1. Now you have the capability to run 8 things at once. You have 1/8 of the power of a connection running to your PS2 now. That isn't anything. Of course alot depends on your connection speed, I am thinking you must have a cable modem. In this case it would be better than just regular DSL because cable is faster.
If you want wireless, I would recommend just buying a wireless router to replace the one you've got. The one that takes wires.
Hope that helps, and again, I am not sure that is exactly all correct...
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