I recently switched from a legacy 2500 to 2x00 (due to kernel upgrade). Everything was working well with the legacy.
Now, when the AP connection is lost (for example, I power-cycle the AP) it is not being reconnected. Trying to reassociate it fails most of the time. unloading the rt2500pci and reloading it seem to solve the problem.
I'm getting "No ProbeResp from current AP" and "authentication with AP XXX timed out".
# lspci -v -d 1814:0201
00:0b.0 Network controller: RaLink RT2500 802.11g Cardbus/mini-PCI (rev 01)
Subsystem: RaLink Device 2560
Flags: bus master, slow devsel, latency 64, IRQ 16
Memory at febfe000 (32-bit, non-prefetchable) [size=8K]
Capabilities:  Power Management version 2
Kernel driver in use: rt2500pci
Kernel modules: rt2500pci
# modinfo rt2500pci
description: Ralink RT2500 PCI & PCMCIA Wireless LAN driver.
vermagic: 2.6.27-gentoo-r8 mod_unload modversions
# uname -a
Linux garlic 2.6.27-gentoo-r8 #16 Wed Feb 11 20:31:19 IST 2009 x86_64 AMD Sempron(tm) Processor 2800+ AuthenticAMD GNU/Linux
Let me know if more info is needed.
I solved this when I moved back to the legacy rt2500 driver.
stable and sound.