So after a long (and very informative) chat with Apple Tech, I've learned that the GPS chip will not operate if you're over wifi (or tethered). The GPS chip will only work if you are pulling 3g cellular data.
So this is how I see the calculus for those who already have an iPhone and don't want to do both the hotspot and 3g data plan services:
Wifi Only:
PRO
1. You can pay for tethering, and share data between all of your wifi mobile devices. You can use your ipad wherever you want. It is a more flexible plan, all in all, if you consider your business connectivity needs as a whole.
2. You can save money from having a separate plan for every device (which adds up). Plus, if you need or want tethering ANYWAY the combination of iphone, ipad, and mobile hot spot gets very pricy. An extra few hundred dollars a year just on data plans.
3. With your iphone, there's nothing you cannot really access from the lack of GPS chip in the iPad. The precision guidance and location services are available.
4. If you go the hotspot route you can use facetime from anywhere you have coverage.
CONS
1. There is the extra step required in tethering. And while your ipad may have a 10 hour batter, if tethering you are limited to your phone's battery at about 4 to 5 hours (estimated). You could buy a Zagg Sparq and counter this, but again, you've now added an extra step.
2. The 3g connection, while an additional data plan with additional cost, has a meaningful convenience factor associated with it that the wifi does not have.
3. While your iphone will take care of your GPS NEEDS, it is very nice to have guidance and maps available on the bigger screen. You won't miss out on anything with the iphone, but it is not as beautiful or optimized as with the ipad.
4. While "Find my ipad" will work for wifi only, the person who stole your ipad would have to get past your password and then log in to a wifi connection for it to be of any real use. If you have 3g and your ipad is stolen, you have a much better chance of immediately locating it.
Summary:
You would be happiest with the wifi iPad if you already have an iphone with GPS location services, if monthly costs are a meaningful factor, if you are willing to tradeoff a few conveniences for price concerns, including monthly costs, and if you want to be able to use face time or skype from any location (assuming you don't want to pay for both hotspot and 3g data).
You would be happiest with the 3g iPad if you are willing to pay higher monthly costs for higher convenience, if you don't have a smartphone with GPS capability, or if you want to have a more precise option for recovering your iPad if it is stolen or lost.
This is how I see it after reading a ton of threads today and considering everyone's thoughts on the matter.