Ah, good comments. Well, I have an Android phone (a Motorolla Cliq to be precise), and to get this functionality I had to "root" my phone (the equivalent of "jailbreaking" in the IPhone realm). If you're worried about the legalities of this, I believe a superior court or someone recently ruled that this kind of "rooting" or "jailbreaking" is 100% legal. If I could know about what particular type of phone Dan has I could probably be of more help, I'm pretty sure it would work for a Blackberry/IPhone as well, though I don't have these types of phones and I'm sure the way to add wireless tethering functionality is a lot different.
Please let me know specifically the type of things you're curious about, but basically your smartphone asks as a wireless hub that transmits your 3G signal to computers around you basically. Like I mentioned it will only be of any use to you if you have a 3G signal. It sucks the battery life out of your phone, so it is best used when you can connect your phone to a wall outlet (or car charger). I've had a history of really crappy ISP's, so in my experience the connection is way more reliable than landline connections.
I was surprised how well it works and how fast it is. It is way faster than an internet connection that is strictly on your phone, mainly because most of the time you wait when loading a webpage on your phone is waiting for your phone's processor to display the information it's receiving on the page, it has nothing to do with the speed of the connection itself.
Economics wise, I have Tmobile and I pay $95/month before taxes for unlimited internet, texts, and calls. I think unlimited internet only adds about $30 a month to most plans, which is cheaper the cable inernet in most cases. You may want to check with your cell phone carrier if they set a limit (like ATT recently did) OR if they slow down your 3G speed after you reach a certain threshold or GB downloaded. T-Mobile doesn't seem to do either.
Let me know if either of you had more questions about this.