A solution involves downgrading the RT2860 driver to version 1.7.1.1 (the last know fully working driver). It seems to work much more reliably for me at least on 1000h.
1) Get the driver from
http://www.array.org/ubuntu/dists/in....7.1.1_all.deb
2) Go to terminal, and move the pre-installed driver so it won't get loaded.
Code:
cd /lib/modules/2.6.28-11-generic/kernel/drivers/staging/rt2860/
sudo mv rt2860sta.ko rt2860sta.bak
3) Install rt2860-dkms_1.7.1.1_all.deb. It will also install dependencies needed to compile the driver. If it doesn't retrieve the right packages, make sure "build-essential", "linux-header-generic" and "dkms" is installed. Let it run and it should complete without a problem.
4) Restart. The new driver should work automatically.