But I'd most likely put the wifi router on the 2nd floor, better chance of whole house coverage. Repeaters or second devices like WDS or Airport Express work great. If the modem connection is on the first floor, I'd put a small GIGE 1000 switch there with runs to the ethernet connections on all floors, then on the 2nd floor drop in the wifi router (with extra ports on it if you like to have some wired there too) and your set everywhere.

Some products work nicely to allow same SSID across all access points and DHCP from one device to all clients. So, for example an apple airport extreme on the 2nd floor providing routing and DHCP, then you could just plug in an airport express devices on another floor if coverage is needed, connected via ethernet and using the same SSID broadcast and getting DHCP address instructions from the airport extreme, so devices would just seamlessly pass across floors if carrier about.

One can do this with other products, there just aren't too many small compact access points that extend a network like the apple airport express.