Wifi seems really unstable since getting new iMac Since I've had my iMac I've noticed that my wifi network locks up a few times a week, it is always fixed by turning off the wifi on the iMac, then turning it back on again.

The network shouldn't be over loaded, it's a Time Capsule with iMac, iPhone, Macbook and Apple TV connected, surely these should all play together nicely!

I've checked and the Time Capsule is at the latest firmware level (7.5.2), so not sure what the next step is.

[edit]
iMac is current model 21.5" i3, OSX is at 10.6.6 and software update says everything is up to date.

To clear up unstable the wifi connection always appears to be connected, but if I'm using the iMac I can't view websites, there have also been times where the Airplay streaming has just stopped, so it seems to be the whole network.
OK well if your problem affects internal traffic (streaming AirPlay) and external traffic (website access) then that points the finger at your Time Capsule.  The fact that you've only noticed this since you connected your new iMac might be a red herring but may also be a hint at the cause.  I'd start with pinging the time capsule and see if you have periods where you can't ping it.  So open Network Utility > Ping and enter the IP address of the time capsule (probably 192.168.1.1) and set it to ping an unlimited amount of times, you'll see output like that below:  

Ping has started…

PING 192.168.1.1 (192.168.1.1): 56 data bytes
64 bytes from 192.168.1.1: icmp_seq=0 ttl=64 time=1.197 ms
64 bytes from 192.168.1.1: icmp_seq=1 ttl=64 time=1.158 ms
64 bytes from 192.168.1.1: icmp_seq=2 ttl=64 time=0.996 ms
64 bytes from 192.168.1.1: icmp_seq=3 ttl=64 time=0.970 ms
64 bytes from 192.168.1.1: icmp_seq=4 ttl=64 time=1.103 ms


This, in case you don't know, is just sending a packet to the IP address of your time capsule and the time=xxxx on the right is a measure of how long it took to get a response.  Now, if something is happening to slow down the network response time, you'll see it here.  As you can see there is very small fluctuations (the units are milliseconds) in the response time but you'll be looking for larger differences, such as 1000ms or even dropped packets.  Obviously this is only useful if you're seeing the issue every few minutes rather than once a day.  Once you prove that you have captured an issue, try the same thing while plugged directly into the time capsule by cable.  If you get similar symptoms then I'd point the finger at the router.  See how you get on with that and I'll update the answer when you come back if I can suggest some other steps.  Good luck!