I noticed on the O2 website that tethering on your iPhone or Android phone is now “free”, well free on the assumption you stay within your data limits.
Whilst my work iPhone is now on Vodafone, I still have my home iPhone, a 3GS model on an O2 simplicity contract. However in order to get “tethering” I would need to sign up to a new contract and they are more expensive than my current rather cheap monthly contract I have now.
I usually use tethering on my “other” home phone an Android device which I now use instead of a 3G dongle or MiFi. The 3G dongle was limiting as I could only really use it with my laptop and not with other devices (read iPad). Also my MiFi has stopped working properly, but I think that’s because the battery has died. So as I have tethering on my Android phone, I am probably not going to change the contract so I can have it on the iPhone. However it is nice to see that if you got a new iPhone or changed contract, tethering is now seen as “normal” and it’s up to the user to decide how they use their data allowances and tethering is not seen now by O2 as something special they can charge more for.
What I would warn though, is though 500MB is enough for most people for internet on the iPhone, you will go through that data very quickly if you use your allowance through tethering using the web on your laptop.