How to fix iMac losing Wi-Fi connection again and again?

You may find that another device is causing interference such as a cordless phone or microwave, or even a neighbour's wifi device. Try changing the channel on your wifi router.

It may be worth using the "alt-trick" to check what's going on with your wifi - when your wifi is connected, mouse over the wifi icon in your system tray, hold down the alt key then click on it. You should see some additional info, like the following:

Keep an eye on the Transmit Rate and RSSI; if they're poor it could be a sign that you need to change the wifi channel.

You can also use Lion's hidden diagnostic app to see what could be causing problems for your wifi.

My router settings were causing the problems for me.

The router was set to 11/B/G/N Mixed mode, and as a result I had constant WiFi dropping. I then set the router to 11/G/N and I have not had a single drop.