The computer should be connected to the Modem via Ethernet cable and NOT Airport.
OS X will redirect the Internet connection by bridging from ethernet to wireless so that the iPad can connect.
If you ask your phone company nicely, they will supply you with a wireless router/modem, for free!
I have a single desktop iMac OS 10.6.5. Having just acquired an iPad which I want to run on WiFi, I enabled same by enabling the desktop access WiFi without purchasing a new router... I am connected by DSL. In Utilities, in Network, I select AirPort and now my computer as well as my iPad will run on WiFi so I don't have to pay 3G fees. Problem is after some minutes my computer drops AirPort and re-selects Ethernet. My iPad shows that I am still connected, fooling me, but the computer Network clearly shows the real case.