Which lights are flashing though? Often the activity lights will flash even when nothing is connecting to your wifi router, it can just be network pinging and quick access checks and such. If the actual "wireless activity" light is flashing, that's a different story.
Try changing your WPA password. Use something strong. As long a password as you can remember. Be sure it's alphanumeric, that it contains at least one symbol (like ! or @) and that it includes upper and lower case letters. If you have MAC address filtering enabled, your router should have a menu that shows which MAC addresses are currently connected to it. Sign into it during a period where you think it's behaviour is erratic and look to see which devices are showing as connected. If one of those devices is definitely not on, then the network is possibly compromised.
In truth, it seems unlikely though. If you have WPA enabled, the only realistic way someone could have accessed the network is via a brute force password attack which would only be effective if your wifi is constantly on and you haven't changed your password in ages. Does your router have an SPI firewall? If so, make sure it's enabled.