For me wireless debugging works flawlessly on my home Wi-Fi, but I always wanted to go in the park and have the freedom of developing applications without the cable, where my iPhone provides Internet via its hotspot.
It would be nice if Apple reconsiders the hotspot and allows wireless debugging and all the other useful features to work without the need of entering IP manually or looking for workarounds.
Connect to iPhone's hotspot. Disconnect the USB cable. My iPhone is still visible under Devices because wireless debugging is enabled, but I cannot run and debug applications. Control + click the iPhone, and select: Connect via IP: 172.20.10.1 Done! Now it just works.
Thanks to eskimo's advice