Hmmm... there's not a lot of erroring, so seems unusual. Anyone on the network running bit-torrent or other file-sharing applications, and left it logged in and uploading ? You don't have a huge upsteam, so if that gets swamped, it'll affect downstream too.
Also, you mentioned you tried a hard reset of the router, was that just pushing reset ? Try: push reset button in, hold for 15-20 seconds, or until Power light goed Red, then Amber, then let go. Takes about 2-3 minutes to complete the cycle.
Could be a dodgy router though, call O2 and ask them for a replacement if all else fails.