Came across this undocumented feature of the new iOS 4.3 update for iPad and iPhones and seems that now you can use the new Personal Hotspot feature in iOS 4.3 for iPhone 4 [Update: turns out it works with iPhone 3G and iPhone 3GS on iOS versions less than 4.3] to tether the iPad to the iPhone via Bluetooth for Internet connectivity.

There goes the last remaining rational reason for me to go with the 3G iPad 2. If you live in a place where WiFi is reasonably ubiquitous and have a smartphone with a nice data plan, it makes little sense to fork over the $130 AND another data plan in order to get 3G connectivity for those rare occasions when you may need it. The only possible scenario that I can come up with is if your smartphone’s battery is dead. The WiFi hotspot can drain the battery pretty quickly, but the Bluetooth tether should go a lot more easy on it.

I can se why Apple would not tout this new feature, and decided to implement it as silently as possible instead. It probably wouldn’t significantly hurt the sales of the 3G iPad, but why take the chance?