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Does changing the channel in which my wireless router broadcasts affects its performance?

And will there be any affect if I change the type of security protocol I use (WEP, WPA2 etc)?

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Changing the channel may affect performance if there are a large number of WiFi routers already using the current channel in close proximity. In this case you may be able to reduce interference and retransmissions by changing channel, the channel number itself will it affect the speed of the router.

Encryption might affect speed on older routers, but I would expect any recent router to have more than enough power to be able to support the encrypted traffic over WiFi. I have seen older routers that could manage almost a third faster speed without encryption but I expect those days to be long gone now as the processors that are used now mostly have hardware encryption support built in. You may get a tiny bit faster by going with WEP encryption but as WEP is easy to crack I would not consider the loss of security to be worth a marginal gain in speed.

For best speed you need to make sure that your router is on a clear channel and if your devices support switching to 5GHz WiFi (which is typically clearer) then that might help.

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Many wireless routers will disable WDS if you enable WPA2. Some do TKIP in software and AES in hardware, resulting in a significant performance difference, especially when other CPU-sucking features are enabled (such as NAT, stateful firewalls, and so on). –  David Schwartz Dec 31 '12 at 20:17
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Selecting non-overlapping channel (1,6 or 11 in 2.4Ghz band) will improve performance even if other networks are present on the same channel (comparing to other, overlapping channels). –  haimg Dec 31 '12 at 20:20
    
For the most part it won't be noticeable. Unless of course you are doing accurate mathematical equations. It really depends on the use. Obviously with a dropped packed it will take longer to resend if it is encrypted. Basically performance will only be affected minimally. –  Sam Dec 31 '12 at 20:22
    
Thanks for the replies. I have another question, silly it might be, but does a bad WiFi adapter on a device in any way result in the wireless router dropping internet connectivity on all other devices? My router is doing this very frequently and then only difference in my house is a new smartphone and a new laptop. –  naren.katneni Dec 31 '12 at 20:24
    
I have had a router in the past that had a problem with the WiFi in a similar fashion, after a few days the WiFi would simply stop devices from connecting to the internet even though wired connections were fine. This was a problem on the router and a replacement router fixed the problem, the WiFi devices themselves were fine. –  Mokubai Dec 31 '12 at 20:31
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