Channels 1, 6 and 11 are some of the most commonly used wireless channels. If you want to avoid potential interference, choose one that isn't one of these three. Position your router away from walls and keep it away from metal, such as filing cabinets. You will also want to place the router higher up, on the top floor or in an attic to get the best coverage.
Configuring your WRT160N router goes beyond just choosing the best channel. You need to take into account of other wireless networks in the area, the positioning of your router and whether you have cordless phones. A wireless N router isn't restricted to broadcasting an N signal; it can broadcast B and G as well. If you want the best performance, you will need to select N as the broadcast type.
Common Wireless Channels
Wireless Network Density
Where you live plays a big role in what channels are best for you. You want to avoid conflicts; the less wireless broadcasts on the same channel, the better. If you live in an area with many wireless networks, you will want to pick a channel that is the least used among them all. You can see what channels each wireless network is using. If there are few or no networks in your area, you can use whatever channel you like.
Cordless Phone Interference
If you have analog cordless phones in your home you will want to keep them as far away from your wireless router as possible. Ideally your phone operates outside the 2.4GHz frequency, as that is most commonly used by wireless networks. If you have a 2.4GHz phone avoid using the upper and lower channels on your router. If you're using an N signal, avoid cordless phones in the 5GHz range.
You will want to select N as the signal type to broadcast for your network. B isn't as fast but has good range. G has decent range but is much faster. N has range and speed. Using an N signal will also keep your wireless network in the 5GHz range, so you will avoid problems with 2.4GHz cordless phones. Just make sure the router broadcasts N exclusively; otherwise you will still encounter interference.