For several weeks I've been using the free app, Quick Settings (the green gear one by Sergej Shafarenka). Instructions follow. But note that if you have any problem with error messages on initial setup, try restarting the phone. Also note that you must have a cellular data connection in order for the Wi-Fi Hotspot to work, so make sure that your "Mobile data" connection is turned on and that you're actually connected to a cellular data network, like 3G. (There is a Mobile data setting in Quick Settings that you can use to confirm that your mobile data is turned on.) If you don't have a mobile data connection you will get a "Network is unavailable" error message. But hey, I don't care which hotspot app you use, if you don't have a data connection, you can't share it as a hotspot!
1) Install it, open it, hit the "settings" button on your phone, and select "Customize".
2) Scroll to the botton and use the gray up/down arrow icon on the right to drag "WiFi Hotspot" up from the "Hidden Settings" area into the visible area. (You might want to also move around any other settings that you care about.)
3) Hit the "back" button on your phone.
4) Select "WiFi Hotspot".
5) Check "Portable Wi-Fi hotspot
6) Select "Configure Wi-Fi Hotspot" and input your desired SSID and security type. "Save".
7) Hit "back" to return to the main Quicksettings menu and under Wi-Fi hotspot hit the "Off" button, which will turn it on.
Note that you can't have WiFi on at the same time that you have WiFi Hotspot on. That is, you can't use the phone to act as a repeater for a WiFi connection. If you turn on WiFi Hotspot, it will automatically turn off your phone's Wi-Fi, and vice versa.
I like Quick Settings, not only for its free WiFi Hotspot capability, but also for its ability to give quick access to many other settings... and for its flashlight capability. I've moved a Quick Settings shortcut to my main screen, which gives me the ability to turn on the Hotspot and change many other useful settings with two presses.