Yeah, I dunno why it's 255.255.255.0, but every small network I've used has been like that. I would guess that you could use any number, just like the router doesn't have to be 192.168.0.1, but almost always is...
Just make sure the subnet mask is the same for all PCs and router and there shouldn't be a problem...
It is quite possible that your router is shagged. I had a D-link one that kept cutting out, it was very annoying. If it's that, just take it back.