Ipad 2 loosing personal hotspot link to iphone 4

The issue is;
I have a iphone 4 from verizon.  I have a ipad 2 wifi, no 3g.  I bring up the personal hotspot on the iphone and connect the ipad via wifi.  The link connection appears and then starts to blink randomly and disconnects in a matter of a few seconds.  There are time I have a connection for about 30 seconds and then it is gone al together.  I have tried all of the regular steps, forgetting the network, reset network settings, etc. short of restoring the devices, which I find hard to believe is a solution to the issue.  Both devices have the most up to date software, both devices are able to connect to other wifi sources.  The hotspot can be seen by other devices and can support attachments to other devices, laptops etc.   Since both devices can connect to other wifi sources I have a hard time believing its a wifi issue.  I'm starting to think this is a proximity issue, or signal interference.

I think you are running into the following issue.
From: http://support.apple.com/kb/TS2756
Note: If you leave the Personal Hotspot screen or put iPhone to sleep, iPhone only broadcasts the Wi-Fi network for an additional 90 seconds. If no devices join the Wi-Fi network during that time, iPhone 4 stops broadcasting your Wi-Fi network. You can start broadcasting your Wi-Fi network again by tapping Settings > Personal Hotspot.
So, if I understand correctly, if you you leave your iphone on the the Settings --> Personal Hotspot screen, than it shouldn't disconnect.

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