So after I had such a problem with my rt2500 based card, I ordered an rt61 based one. It arrived this morning, and it works. Here's what I did to get it to work.
First download the cvs snapshot driver. The beta release one doesn't work, and you shouldn't try it. Untar it and go in to the Module subdir. Then run make. The make install looked a little dodgy to me, so I copied the driver across and ran depmod.
# cp rt61.ko /lib/modules/$(uname -r)/kernel/net/wireless/ # depmod -a.
Then grab the the firmware from RaLink and unzip the files in to /lib/firmware.
Then add the alias
# echo "alias ra0 rt61" >> /etc/modprobe.conf
The interface will be called ra0, so change any config files (e.g. /etc/network/interfaces) to reflect this. You should then be able to ifup ra0 and have the interface work. Good luck!