FoxFi Software has just released their free app with allows the creation of a Wi-Fi Hotspot without the need of rooting your Android phone. FoxFi does point out it currently works on only large handful of phones and does not work on any HTC.
Currently works on most Samsung phones, some Motorola phones (Razr/Bionic/DroidX), LG Optimus/Vortex/Ally, ZTE N762, HuaWei Comet. Does NOT work on HTC phones or Motorola Droid.
It’s still in beta form which has a few minor bugs, so they have a few tips on dealing with those. They did include WPA2 availability for more secured connections. So far FoxFi works flawlessly on my Samsung GS2. I connected my Motorola Xoom to the hotspot created on my GS2 with FoxFi and was getting over 5Mb down on a speed test. Combined with the unlimited data plan I still have on AT&T makes this guy one happy camper. –Greg
Download FoxFi from the Google Market