I would highly recommend using Titanium Backup to save all user installed apps and system data before flashing an update.
Then after flashing the update if you have lost your settings you can run the restore batch and everything will be back to normal.
(Make sure you change the default backup location to the external sdcard.)
Here is a direct link to WiFi Tether for Root Users 3.1-beta9. (the latest non-experimental) The one from the market is outdated.
This is not an ad-hoc network and will work for connecting to other Android devices like tablets.