Buy the LG Optimus V from Virgin Mobile. It's not super-powerful smartphone, but it does everything that I need it to and is only $150. Then get the $35 / month plan that goes with it.

To tether you only have to download the "Quick Settings" app from the Android market and turn on the wifi hotspot. I'm on the move a lot and have used this as my main internet connection for the last 3 months.

No contract, unlimited data, stop any time. The deal was too good to pass up.