Tethering an Android 2.2.1 (Froyo) using Wifi
If you are on linux, check up the kernel routing table by
typing route at terminal.

if you do not have a default entry in the list it won't work.
For example my kernel routing table reads:

Kernel IP routing table
Destination     Gateway         Genmask         Flags Metric Ref    Use Iface
192.168.137.0   *               255.255.255.0   U     2      0        0 eth1
link-local      *               255.255.0.0     U     1000   0        0 eth1
default         192.168.137.1   0.0.0.0         UG    0      0        0 eth1


Type in this command at terminal and see if it works:

sudo route add default gw 192.168.43.1 wlan0

where wlan0 is your wireless interface....

also you could try rechecking the dns server on your machine
and add the following lines to your etc/resolv.conf

nameserver 8.8.8.8
nameserver 8.8.4.4