After testing this for a few days now and each time the
WIFI connection times out, I did some basic trouble shooting.
1. Ping test to router (iPhone LAN IP), from Laptop
Pings timeout at almost exactly 60 seconds (62 - 65 pings) after
WiFi Tethering is turned on.
2. When I check the MyWi settings (Opened app) the Wifi Tethering is set to OFF, even though I still have tethering blue glow on menu bar above.
3. When I turn ON WiFi Tethering again (Even though according to blue pulsing bar it should be on) My Ping test resumes to iPhone IP.
4. If you leave the MyFi application open while tethering, you still loose routing, but the tethering switch doesnt turn off, unless you close app, and re-open.
5. Seems after about 1 minute, the MyFi.app no longer routes traffic and its hotspot is also no longer visable. MyFi also thinks tethering was turned off when re-opening application. Also note that I did not want USB and Bluetooth tethering on, but it turned on when I enable Wifi, and Im unable to turn it off until the wifi stops, then all thats left is USB/Bluetooth.
ScreentShot of Tethering Blue Pulse flasing, and MyFi says tethering is off.
Looks like USB Tethering works GREAT in my limited tests. Only the WiFi Tethering stops responding after 60 seconds.

Maybe its the iPhone re-scanning for wireless interval or something???
USB Tethering BUGS:
1. Title of Blue Tethering Pulse Menu, says Edge Internet Tethering (I have 3G), and seems it should say USB Tethering.
2. Blue Tethering Pulse Menu - The data rate (Download/Uploads) are not growing as I use the connection
3. Blue Tethering Pulse Menu - The data rate (Download/Uploads) ON LOCK SCREEN do grow!