The hack is now back! 
. Its now possible to enable Tethering on iPhone OS 3.1.2. And I have tried this and appears to be safe!
What’s Internet Tethering?
Internet Tethering is a technique that allows a user to use his/her iPhone as a wireless modem to share its Internet connection with a computer via USB cable or Bluetooth interface.
Create a WiFi Hotspot to connect mutiple laptops or mobile devices and share the iPhone’s internet connection (May it be EDGE or 3G).
40 bit and 104 bit WEP Security
Ability to enable USB and Bluetooth Tethering on your iPhone as well
Uses less battery and much faster then PdaNet due to native routing
Broadcasts the Network Name (SSID) – no need to fuss with creating an adhoc network on your laptop
Enable iPhone USB/Bluetooth tethering – even on firmware 3.1!
Shows up and down bandwith usage
Feels interesting? But unfortunately, AT&T blocked Tethering for its users. But now, there is an app called “MyWi” which enables tethering on all iPhones (including 2G(EDGE)/3G/3GS) on iPhone OS 3.1.2 in just 5 simple steps on your Jailbroken iPhone!
Some of the notable features of MyWi are:
Installation Steps:
These steps work fine on iPhone 2G(EDGE), 3G, 3GS:
Step 1: Goto Cydia, search for “MyWi” app and install it. MyWi will also install "RockApp” as a part of its package. Install RockApp manually if it isn’t installed automatically with MyWi app.
Step 2: Now start RockApp and create a free Rock ID for yourself.
Step 3: Sign in using this ID in RockApp and you should now see an update to MyWi app. Restart your iPhone once the update has been successfully installed.
Step 4: Start MyWi app and turn on the option for USB/Bluetooth tethering.
Step 5: Now simply navigate to Settings->General->Network->Internet Tethering on your iPhone and turn on the toggle for Internet Tethering.
