Hi, After countless hours, days, weeks of frustration and even talking to an Apple specialist didn't help. I took it upon myself, thru trial and error, I finally got everything working the way I wanted it to.
First I have 4 computers, 3 airports (one AE and two AEBS) taking the latest AEBS and making that one my base station to work off of. Under airport tab-wireless tab, I created a wireless network and used N and G configuration. Channel automatic. WPA2 personal wireless security.
Then on the other two airports I extended the wireless network option under airport wireless tab. All three using ethernet/dhcp.
Then, here is the critical thing that made everything work in synchronicity.
Under the internet tab, I chose connection sharing; using "share a public IP address and not using wan or ethernet wan when updating. This has everything working-most importantly my iphone is working again in wifi.
PS: always repair permissions after any update.
I am one happy camper again. Jon L