Earlier this week a security hole was discovered in Android that allowed users to 'jailbreak' the G1 and gain root access to the device. This was different to the hack iPhone users are so accustomed to, which enables them to use their phones on different networks and install unofficial applications, but jailbreaking Android did provide some useful advantages, such as enabling users to bypass the G1's internal storage and install programs on external media.
Unfortunately, this also represents a gaping vulnerability that could enable malicious applications to gain full access to the file system and sensitive user data. Google says they're going to close the hole with an over-the-air patch in the next few days, followed by an update the open source code base to reflect the changes.