A friend dropped her iPhone into a lake recently, and being the gentleman, I lent her my iPhone since it'll hold her over until the next iPhone launch. Yes, I also recommended the Nexus One and EVO to her.
But I don't use my G1 much because Android 1.6 was so dated compared to 2.1 and what we now know about Froyo, the latest Android build.
So, following the wiki instructions from Cyanogenmod, I was able to upgrade the G1 to Android 2.1 with Cyanogenmod 5.0.7. It was a quick and simply process and these folks really know their game.
One thing I do recommend you do: Follow the freaking instructions letter for letter! Yeah, there was a part where you're asked to do a backup. Do the backup. It really saved me because I skipped a couple of steps and confirmations earlier in the process. It was really a prep that you need to before flashing Android 2.1.
Now, how does it run? It seems to run smoother than Android 1.6 despite being a more sophisticated OS. I especially like the live wallpaper feature but I quickly turned it off (downloaded the Matrix version) since I didn't really need it.
There is an widget that I don't know if it came with Nexus One that allows quick access to turning on and off any features that might be a battery drain. Bluetooth, Wi-Fi, GPS, and the ability to have three preset screen brightness.
If you're adventurous, give it a go. Definitely recommend it. And honestly, if I can do it, 99.99% of you can as well.