I've managed to fix this, but have no idea what was wrong with it. This is what I did: Control Panel / Network and Sharing Center => View status (of the Wireless Network Connection, not the Dongle) => Diagnose etc. Obviously I'm just pressing buttons with no idea where I'm going. It waved its wand and then by magic I had the internetz back! So hardly a satisfying outcome I'm afraid, but thanks all for chipping in with your help.
diagnose and repair network connection just releases and renews your ip to the router it could be that you had a 169. ip address and a release renew fixed it if you keep getting issues download INSSIDER from the net (google it) find a clear wifi channel and set your router to the most clear channel in your area wireless interferance is a big issue with making your router drop out hth math