First I take no credit for this tip... as it was our member mkraffert that posted this tip for me to try! Thank you very much!
Anywho if you are haveing issues with WiFi tether working after upgrading to Froyo. My issue was WiFi Tether would connect to my laptop, but I did not have internet access. So to fix just simply uninstall the WiFi tether app version 2_0_2 and download the 2_0_1 version from here found on this page Code.Google.com
As soon as I installed the older version it worked like a charm again. Hope this helps you as it helped me.