There are 3 or 4 wireless networks in my area, depending on signal strength of the most distant.... Only two use encryption and one of them is mine.
In regards to a "residential area" as you put it, I think it depends on the area. For example, where I am, let's just say bra size is larger then brain size for
both sexes, computer geeks are more rare then finding rhodium in your backyard, peoples understanding of cracking follows
Clarke's third law, which the've never heard of... And anyone smart enough to use tools to make it simple, are more then far enough displaced from here that I don't need to line my bedroom walls with
RADAR absorbent material to feel safe.
In your area the inverse could be true, on you would know.
Compared to a wireless network, it's the same problem but in a very different way. If someone gets into your home, they can always unplug one of your computers and get on your network, even easier if your using DHCP. With a wireless network, they don't have to get physical access to your network in order to join it. "Wireless Equivalent Privacy" is just what it says it is, equivalent privacy to what you get over Ethernet/Token Ring systems (at least I assume so, since I've never used Token Ring). It's just enough security that the you have to 'want to' break in in order to do so. WPA/WPA2 and other methods provide tougher encryption but anything can be cracked given enough time and effort.
I'm not sure how many consumer wireless routers and AP allow you to place wireless clients in a separate
virtual networks or not. But if your system can do so without interfering with your needs, you might look into it. Most consumer APs should allow you to restrict connections based on MAC (for what it's worth) /or segregate wireless clients off from the wired network, I would hope.
The problem with wireless is just that, it's wireless technology. Take what measures you can if you use it, and think carefully what you let pass. From my laptop to my AP, the wireless connection is encrypted and things 'of importance' that have to go across the wifi link are usually conducted via SSH, HTTPS, or likewise some encrypted protocol.
In the hopes of avoiding the "Hey wait, this isn't my network..." kind of situations. I configured my systems to
only connect to my WLAN automatically and in the case of my laptop, I usually disable that automation when traveling, then encrypt the information in case of theft.