Same problem here, I find that going to the hotspot screen, turning the hotspot off, leave it for a few seconds and then turning it back on seems to work most of the time. The trick for me is after you turn the hotspot back on don't push any buttons or change screens until the computer has connected. If I push the home button before I've connected the pc the network doesn't show up. Not really a solution but a temporary workaround. Needs a fix ASAP!!!!
Same problem. iPhone 4s w/OS 5.
I activate my iPhone's hotspot (with password), connect via wifi, work (or play) a bit, get distracted for a few minutes, come back and there's no internet, check wifi connection, not connected, signal from the iPhone is not present, refresh to look for wifi signals, other signals are there but not iPhone's. The hotspot simply goes away.
I ditched another isp with spotty service with the intention of connecting my pc and iPad to the internet via my iPhone. Did I make a big mistake thinking my iPhone hotspot would be more stable?