Here's a story from this year's Maker Faire put on by Make Magazine. It's a how-to that claims to "turn your $60 router into a $600 router." Upgrading will add a bevy of features, including a stronger wireless signal, advanced QoS (quality of service) support, VPN access, and more.
Firmware upgrades for the Linksys series of routers, specifically the WRT54G series, have been around for a while as a result of the discovery of Linksys/Cisco's use of GNU/Linux in the router's firmware. Per the GPL, Linksys had to make the firmware publicly available. The open source community has really run with the software, and taken it to new heights.
I don't know if this will truly make your router compete with the higher priced offerings from Cisco, as I haven't tried it myself yet. Although I've been weary hacking up my router, I think that I'm willing to give this one a go. I'll let you know if I manage to brick my router.
Link (via Digg)