It was working perfectly until I upgraded to 5.1.1
My carrier also places no restrictions on tethering whatsoever. I have also jailbroken just recently but I had the problem for some time prior to jail breaking. I'm thinking of restoring as new, jailbreaking and then manually installing all my apps again since a restore from backup has not worked previously.
I'm new to jailbreaking, so I'm just nervous about my jailbreak purchases.
Update: Seems it was a password issue... Changed the password prior to switching on personal hotspot and it started broadcasting the signal. Glad I didn't have to go through the process above.