I booked a stay at the Hyatt months before the hotel announced its smartphone program. The rate (about $240) was quite good for Hong Kong even without the added benefit of a free mobile phone, and even though I purchased a SIM card from KeepGo to use with my own handset, I ended up leaving that one behind and using the hotel's instead. The device is provided by a local company called Handy, which rents similar phones to tourists for about $11 per day, including the same unlimited 3G and international calling plan. Handy also provides phones to The Mira, another Hong Kong hotel, which began offering smartphones to guests last year.
The phone, an Alcatel Idol X, is hardly the best device on the market, but it served me just fine during my two-day stay. It worked well for Instagram, and while I often had a bit of trouble getting the GPS to find my precise location, destinations loaded quickly in Google Maps and the pre-loaded currency-conversion app was quite useful at shops and restaurants. There was plenty of practical info for Hong Kong, including a list of emergency numbers, transportation options -- even information about the city's smoking ban. The sponsored restaurant and shop listings weren't terribly useful, though, nor were the limited discounts ($5 off at a Noah's Ark theme park, a sightseeing tour or a wax museum with life-size figures of Chairman Mao and Jackie Chan).
For me, the standout feature was tethering support. The Hyatt offers complimentary WiFi, but my laptop kept dropping the connection, and the few times it did work, the service was painfully slow. Fortunately, the Handy phone had tethering enabled, and the 3G speeds were very good (about 5.5 Mbps down). Battery life wasn't fantastic, even with the WiFi hotspot disabled, but I did manage to get through a full day without charging up. It's a free phone, though, at a very nice hotel with a reasonable daily rate. Just don't lose it or "forget" to leave it behind when you leave -- you'll be billed about $250 for a replacement.
Update: The folks behind Handy wrote in to address your privacy concerns:
We are super excited to be able to disrupt the hospitality industry, starting here in Hong Kong. The handy is more than a standalone mobile phone, we are able to integrate into hotel property management systems so that the phone receives a notification when a guest checks in or out. This enables our phones to perform a complete factory reset automatically when a guest checks out in addition to guests manually clicking 'clear data' on their own.
We never store or access any user's private information. All user information is destroyed and never retained after the automatic factory reset. In fact, our system can perform a remote wipe and reset on the device in the event that the guest loses the device. We take these multiple steps in order to delete and wipe data because we take the security and privacy of our users extremely seriously.