This may not help you guys but its worth a shot (follow previous advice first and momentarily disable security to ensure you can even connect in the first place). I was also unable to connect to my router using WPA2-PSK (or WPA2-Personal whatever you prefer to call it) due to a bad password error. I used the same password/router on 2 windows computers, 2 android phones, and a laptop with ubuntu 10.10. But on my main machine with ubuntu 11.10 and a new wireless card, I was unable to connect (unistalled nm, tried wicd, etc..). The solution ended up being surprisingly easy. I changed the psk on my router to one generated from:
HTML Code:
http://www.yellowpipe.com/yis/tools/WPA_key/generator.php
I won't pretend to know why (read somewhere that it could help, would credit but I don't know where I read it), but it worked with the generated psk. Nothing else I did or tried had worked. It also works with network manager. Granted, I had to change the password on all my other devices/computers to the new one, but it could've been a lot worse. Hope this helps someone. It's worth a shot to try it before you spend hours messing with settings. Only takes a second to change back to the original password if it doesn't work.
Note that some characters generated may not be compatible with your router, this happened to me and I just generated a new one until there were no incompatible characters (there was no warning, when i pasted the key to the box on my router the characters just weren't there, no spaces or anything in their place, just gone). Only took 2 generations. Oh, i chose the minimum security (20 characters/160 bits) as I also have mac address filtering and am not overly paranoid, but choose whatever you are comfortable with.