I have an iPhone4. Been using the personal hotspot off and on for the past three weeks. No problems. Used it today then went to use it again tonight and it will not connect. Shows in my Mac Airport as an optional connection but when I click on (just as I have been doing all along), it now asks for a password. I had to do this when I first connected but, after that, stopped asking for it. Nonetheless, I did type it in this time and that did not work. Keeps timing out.
I've restarted the computer, turned off the hotspot and then back on, etc. I do have a MiFi and I alternate between using these two for internet connection. As I said, it is only tonight that it just stopped connecting. It does show as available and, in the past, I could just flip between the two options.