That's a pretty good plan, I'd say. Consider that you'll save about $130 in the initial purchase price. Add to that the fact that you'll save up to $30 per month on a separate data plan from Verizon or AT&T. (Assuming you're in the US.) Keep in mind, however, that you may have to pay a "tethering" charge on your phone that could amount to about $20 per month.
In addition, there's another potential benefit that's often not mentioned. If you change to a smartphone that supports 4G you'll have a MUCH faster internet connection for your iPad than you'll ever have with its built-in connection. (My 4G/LTE hotspot runs from 7-10 times faster than 3G.)