Laptop loses internet connection when lid is closed

I can think of two things: Either Windows is powering the card off (due to power-saving settings that would usually take effect when closing the lid), or closing the lid causes the wifi reception to change such that you can no longer get a reliable signal. Here's a free utility I found that can track signal strength over time; you could use it to log how the signal changes based on the laptop's position and state. inSSIder

I should also add that nearby objects can affect wifi signal, even if they are not physically between the laptop and the access point. So, if you've recently rearranged the furniture or something, that could also be a factor.