One of the simplest solutions for Android Wi-Fi hotspot functionality is a free little app called FoxFi. FoxFi gives you a one-touch checkbox on your phone that activates a Wi-Fi hotspot. It allows you to set up your own network name and password with WPA-PSK protection. The app supports Bluetooth-based tethering, too, if you prefer to go that route.
FoxFi is not currently forward-compatible with Android 4.1 (Jelly Bean) and consequently will not work with any devices that have been upgraded to that level of the platform. Some carriers have also blocked it from appearing in the Google Play Store for smartphones connected to their networks.