Here's a section from the FAQ from the Motion-X (Makers of GPS Software in the App Store)
Q12. “If I tether my iPhone 4 to my Wifi only iPad using the personal hotspot feature, will my Wifi iPad receive a GPS signal?”
A11. Unfortunately no. While there have been claims that one can obtain GPS location data by tethering an iPhone 4 to a Wifi iPad using the personal hotspot feature, this simply isn't the case. TabletMonsters.com posted a video showing what appeared to be location data passed from the iPhone to the Wifi iPad, but this claim has since been debunked by our own testing and others.
If you'd like to confirm this yourself, try the following. Setup the personal hotspot feature ($20/mo from AT&T) using Bluetooth to connect your Wifi iPad to the iPhone 4. Turn Wifi off on your iPad to ensure the location on the map isn't being updated using Skyhook's Wifi access point database. Launch the native maps app on the iPhone 4 and wait until you see the blue dot "ping". Your iPhone now has a GPS signal. While tethered to your iPad via Bluetooth, launch the native Maps app on the iPad. When the maps app is opened, a popup will state "Cannot Determine Location". So the iPhone didn't send the iPad it's GPS location data. If you turn Wifi back on, you'll see your approximate location updated on the native maps app on the iPad, but this location is simply your iPad looking up Wifi access points in Skyhook's database to determine an approximate location.
http://gps.motionx.com/iphone/faq/#12Theres also a couple of links inside that which show why this is false.