Just a couple of notes on this.
You have to be on a "current" package for this to work (one that started since about March 2011). If you are on an older tariff, it might not include tethering.
Once you hit your data limit, O2 will slow your connection speed down quite substantially for the rest of the month. There isn't an additional fee. If this happens, you can choose to pay for a one-off data bolt on.