Comment 16 for bug 876147

Note: 'iwlagn' becomes 'iwlwifi' on kernel >=3.1
For those that did not read the upstream bug, the fix for this issue is to:

sudo modprobe -r iwlagn
sudo modprobe iwlagn bt_coex_active=0

To make the change permanent:
gsku gedit /etc/modprobe.d/iwl.conf

Copy/paste this line into the new file:
options iwlagn bt_coex_active=0

Save. Quit.