Looks like the Google Android T-Mobile G1 has been cracked as members of the XDA Developers forum have found a way to gain root access as there is apparently a loop hole in the PTerminal app which grants access.
The PTerminal app can be downloaded from the Android Market and apparently you can use this application to begin a telnet connection with the T-Mobile G1 and a computer.
Gaining root access or “jailbreaking” the T-Mobile G1 will open the door to loads of new hacks and even a task manager to end task applications. Will Google push out a quick patch to plug the loop hole? Possibly.
Source — android community