Problem potential solution
Many thanks to those who have posted possible solutions that worked for them. It assisted with being able to piece together a solution that has worked for me. As with most problems of this nature, its likely unique to your environment.
My environment, Droid 2 at home, D-Link DIR-825 Router h/w B1, now at firmware level 2.03NA (shipped with 2.02NA).
While I am convinced the Driod 2 has a firmware problem as we have both a Droid 2 and an HTC incredible (the latter works flawlessly in the same space) and I need to address that back at the Verizon store, in the meanwhile I wanted to at least try to get it stable on the network at home. So using various suggestions from this forum, I spent some time going through them. None of the suggestions worked for this combo.
I was however convinced given the symptoms (on off on off, never on the network for more than a second) and it always seemed the droid was always saying "waiting for address..." or such.
So I thought about the static addressing a bit, I didn't really want to put the phone in that mode, so I though I would use the mac address and get the router to hand out the same reserved IP. There the fun started. The router was convinced that the mac address was invalid (it starts with F8, most addresses start with 00). So off to the D-Link site, yes they were getting many hits on their forums for invalid addresses, and they did have a firmware upgrade, so I downloaded and installed that. The phone was still not happy with just the upgrade, but when I assigned a reserved address, solved... the phone is now 100% stable on the home network. So while I'll leave the why's to more capable DHCP experts, this experience may help others on their quest to get this working at least at home.
Hopefully Motorola will over time find and flash the firmware to fix this, or adopt a new chipset or such. I will be working with the Verizon store to pursue this. My thanks to those who posted their solutions, it was beneficial to get me looking in the right places.