I installed Ubuntu 8.04 and the wireless connection was working but extremely slow.
After a lot of time looking for information and solving problems (including the deactivation of IPv6) I ended up in the bug #190515
I succeeded in installing working drivers and I have again fast internet.
Thanks a lot mainly to SirYes for his answers, it was the basis for this solution and most of the text below is coming from him.
I would suggest you to do a local copy of this procedure (and the links content at the very end), so in case you dont have internet it'll be still fixable 
Here's the procedure I followed to make it work:
0. Open a console and enter in root mode:
[enter your password if requested]
1. Install build-essential package
Code:
apt-get install build-essential
apt-get install linux-headers
apt-get install module-assistant
run module assistant:
select "Configure the system to compile modules" and press ok
NOTE: I think installing module-assistant and selectig the option "Configure the system to compile modules" all the previous steps are done as well, but its just what I did...
2. Go and download the "Last beta release" of the rt2500 (PCI/PCMCIA) from serialmonkey
UPDATE: Is better installing the lastest CVS version of the serialmonkey drivers, instead of the latest beta version. For some people the beta version is not compiling, I don't know why.
The last version is the serialmonkey download section, under CVS hourly tarball: rt2500-CVS
Remember to save the file in your home directory! (see step 3.2)
3.
3.1. Create a temporary working dir:
Code:
mkdir /root/source
cd /root/source
3.2. Unpack the downloaded source code (I will assume here that the file
is named rt2500-1.1.0-b4.tar.gz and is placed in your home directory):
Code:
tar xvzf /home/yourlogin/rt2500-1.1.0-b4.tar.gz
4. This step has to be done only once: open the following file in editor:
4.1.
Code:
gedit /etc/modprobe.d/blacklist
4.2. At the end of this file add the following lines, then save the file:
Code:
blacklist rt2x00lib
blacklist rt2x00pci
blacklist rt2500pci
5. The following steps are required every time new kernel is installed, because
the driver (module in Linux terminology) will be available only for kernels
against which it would be compiled:
5.1.
Code:
cd /root/source/rt2500-1.1.0-b4/Module
5.2.
Code:
make clean ; make ; make install
5.3. Make the kernel use your preferred modules:
Code:
dpkg-reconfigure usplash
(usplash here is another story, but the above command generates initial
ramdisk used at boot time, and puts all modules in it - as required)
5.4. Reboot your system so the old modules will not be used, but
instead only the freshly compiled rt2500 module.
6.A If the Network Monitor is not working, you'll have to configure the
connection manually.
Open the System > Administration > Network or left-click on the
Network Manager icon and select 'Manual configuration'.
Unlock the configuration window using your password.
Open the properties window of your wireless network interface.
First disable the roaming mode. Then provide all the details you need,
typically it's enough to select 'Automatic configuration (DHCP)', type
in the ESSID and a key.
Close the properties window and make sure the connection box is
'checked', so it's automatically started upon system boot.
6.B If your connection still doesn't work, you can also edit relevant file manually:
6.B.0 edit the interfaces file
Code:
sudo gedit /etc/network/interfaces
6.B.1 Append these lines:
Code:
auto ra0
iface ra0 inet dhcp
pre-up ifconfig ra0 up
pre-up ifconfig ra0 down
pre-up ifconfig ra0 up
pre-up ifconfig ra0 down
pre-up iwconfig ra0 essid "******"
pre-up iwconfig ra0 mode Managed
pre-up iwpriv ra0 set AuthMode=WPAPSK
pre-up iwpriv ra0 set EncrypType=TKIP
pre-up iwpriv ra0 set WPAPSK="*********"
pre-up ifconfig ra0 up
6.2 Substitue the ***** by your ESSID and Pre Shared Key
6.3 save
6.4. Restart the networking service and hope for the best. This has
the additional benefit that you'll be able to watch exact progress and
see what happens:
Code:
sudo /etc/init.d/networking restart
Should something go wrong and you didn't have even the flaky and slow
old net connection, remove the lines you added in
/etc/modprobe.d/blacklist at step 4.2, regenerate initrd using the command
from step 5.3 and reboot.
Remember (now here's the catch) to repeat all steps from point 5 after
your Ubuntu upgrades its kernel. Otherwise the new kernel will not use
the blacklisted modules *AND* will not contain the compiled rt2500
module as well. You can guess what would be the result 
More information:
compile the latest drivers and edit the /etc/network/interfaces
https://help.ubuntu.com/community/Wi...r/RalinkRT2500
edit the /etc/network/interfaces
http://ubuntuforums.org/showthread.php?t=241565
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