Wireless CAN be expensive.
And router is more expensive than switch, I would go for switch if you are looking for the cheapest option.

Or you could just get a 2wire home portal. It's freaking easy.
with built-in firewall and stuff. Plus, you can use your POT line.

Do you know what kind of wiring in your house?
Cat3 or Cat5?

Correct me if I got something wrong.