iPhone USB Tethering Problem
Over here the iPhone USB interface in the Network pane also keeps displaying 'not connected' when the USB cable is connected to the iPhone.


Mac OS X: 10.6.8
iPhone: 4
iOS: 5.1
iTunes: 10.6.3
iPhone Configuration Utility: 3.5


The cause is a faulty /System/Library/Extensions/AppleUSBEthernetHost.kext, though the version 2.3.0 is correct, its size of 78 KB, 60.892 bytes is not.

A known to be working AppleUSBEthernetHost.kext for iPhone USB tethering is version 2.3.0, but 225 KB, 189.646 bytes.

The fix is:


In Terminal: $ sudo rm -r /System/Library/Extensions/AppleUSBEthernetHost.kext # to remove  
Restart (not sure whether this is necessary)
Reinstall iTunes (in our case 10.6.3), this also installs the good AppleUSBEthernetHost.kext: download iTunes from https://www.apple.com/itunes/ and run the installer, this will install the correct AppleUSBEthernetHost.kext.


When tethering still doesn't work:


Apple menu > System Preferences > Networking > remove iPhone
add the iPhone again
hit the [Apply] button 


PS According to our backup software somewhere around May 7th, 2010 a newer version of AppleUSBEthernetHost.kext was installed.