Unable to connect to WiFi iPhone

Just upgraded my iPhone 3G to a new 3GS and have given my old one to my Dad. He is delighted!!! The O2 signal in his house is fine for calls and texting but very slow for internet. No problem I thought, we will connect to your home wifi network. Wont work. Phone picks up the network no problem but when the passcode is entered it says unable to join ***** network. His is with the Post Office and they were NO HELP as they DONT SUPPORT iPHONE!!!!
Have tried with my 3GS and with my MacBook and they wont connect either. Any ideas gratefully received. Thanks.
MacBook Mac OS X (10.6.2) iPhone 3GS 16GB mobile me