I was wondering if internet connection sharing was made impossible by Microsoft on netbooks even after an Anytime Upgrade to Windows 7 Home Premium. This is because whenever I create an Ad-Hoc network on my netbook I am unable to turn on Internet Connection Sharing. Though my friend with a Toshiba notebook running Home Premium is able to turn on Internet Connection Sharing.
Windows 7 Home Starter Limitations: http://social.answers.microsoft.com/Forums/en-US/w7install/thread/422801d5-89de-494d-8cc1-6f4fc21c2ac0.
My impression though is that you should be able to use ICS. However, if your using HomeGroup, you can join only.
This may help, something to do with shortcut not working but you can work around it: http://www.withinwindows.com/2009/12/02/windows-7-starter-hides-but-allows-ad-hoc-networking/.
Where did you buy the netbook? You can typically get Home premium Anytime upgrade at a discount when you bundle it with a netbook purchase at most retail stores. (eg Best Buy does it).