1. It doesn’t actually tether – that is, it’s not a modem that your computer uses to create a real IP connection. Instead, it’s a proxy – with all the problems involved with using proxy servers.
2. It requires you to set up an ad-hoc WiFi connection. Not only is that a PITA, but other people could then hijack your iPhone’s internet connection
3. Tethering requires a more expensive data plan (to the tune of $60). Using a proxy to bypass that is violating AT&T’s terms of use.

Imagine if you and everyone else who installed NetShare suddenly lost your AT&T account. Not only would you lose cell service, rendering the iPhone useless, but you’d still have to pay the $185 (or whatever it is right now) termination fee. Not only is this possible, but it’s pretty easy for AT&T to do: the simple act of monitoring HTTP requests and checking the user-agent would be enough to prove that you’d used your PC, instead of the iPhone’s browser. (yes, you could change your user agent, but that won’t affect the logs that are already sitting on an AT&T proxy server somewhere…)

If Apple and AT&T want to set up tethering on the iPhone, I think it’s a great idea – and I’d definitely sing up. (I already have a separate cellular modem, and I love it.) But it needs to be done right: the iPhone needs to be set up as a USB modem, and you would then use the proper data plan with AT&T. Done that way, it would only cost $30 more than what you’re paying now.

Incidentally, you CAN get a wireless modem from AT&T for free if you sign up for a wireless broadband account, but you’d then be spending an extra $60 for the wireless broadband account. Maybe AT&T could give us a break and only charge iPhone users $30 to use a dedicated wireless modem… I’d go for that.