This is my first post here, so I hope to start with the right foot!
This problem seems to be caused by incomplete device addresses in Zeroconf (aka Bonjour) created queues in Mac OS Leopard. It's not a driver issue, so it's no use trying different driver versions.
Since all printers in Mac OS X are managed under the hood by a piece of software called CUPS, I thought maybe I could use CUPS to try and fix printers connected to my Airport base stations...
Here is how I fixed my problems with both an Epson Stylus D120 and an Epson Stylus Office T33 (both of these are essentially the same printer as the Epson Stylus C120 sold in the US or the C110 sold elsewhere).
STEPS:
1) Connect the printer to one of your Mac's local USB ports.
2) Open System Preferences/Print and Fax to make sure the printer is recognized.
3) Print a test page to make sure the printer is addressable.
4) Open CUPS printers page at
http://localhost:631/printers
5) Notice that the Device URI: line ends up in something like "serial=hexadecimal number", where hexadecimal number is the needed information for the following steps to work. This number is unique for each printer that has an USB port. It's generated with the printer's serial number by EPSON's initialization program, which is ran at the factory. In my case it was "serial=4B4D544B3030323597"
6) Carefully take note of all hexadecimal digits after the equal sign.
7) Connect your printer to your Airport base station.
8) In System Preferences/Print and Fax, add the printer again in case you deleted the non-working queue out of frustration.
9) Refresh CUPS printer page in Safari in order to show the new (airport connected) queue.
10) Notice the Device URI: line ends up with a period. For example, Zeroconf created my queue to read as ---> mdns://EPSON%20Stylus%20Office%20T33._riousbprint._tcp.local. <--- THIS IS INCORRECT SYNTAX because such addresses never end in periods. That's how I found something was wrong.
11) Click Modify Printer.
12) Click Continue button. Take note of the printer's Description as it will be needed ahead.
13) Press the Continue button until you reach the Device URI page.
13) Complete the device URI with the correct syntax. In the above mentioned example, I changed it to read : ---> mdns://EPSON%20Stylus%20Office%20T33._riousbprint._tcp.local./EPSON%20Stylus%20Office%20T33%204B4D544B3030323597
14) Click Continue two more times.
15) Finally click Modify Printer to save the changes.
Note that in the above example there are a lot of %20's. This is how you add spaces in web pages. Just use %20 whenever a space is needed, as you would probably find spaces in the printer's description.
Also note that you need to add a forward slash to the end of the Device URI generated by Zeroconf, just after the period. Follow that by the printer's Description you noted in step 12, followed by a space (%20) and finally by the device hexadecimal serial number you noted in step 6.
I hope this helps with other people's problems with Airport connected printers. Unfortunately, I do not know if it works with all EPSON printers, nor printer's from other manufacturers. It just worked with two different EPSON printers I have that would not print if connected to either my Time Capsule, nor my Airport Express with 802.11n, when trying to print from either my iMac or my Macbook.
What are you waiting for? go fix your Airport connected printer!