I have done a little investigation. Remember this about my comments: I am only now coming up to speed on Andriod development and have not studied the Linux implementation in detail on Android. I don't want to root my phone (in case I decided to take it back) at this time. However, the internal memory is device mmc, Major number 179, minor 0. /proc/partitions shows mmcblk0 with a total size of 2203648Kb. People are seeing "1.2GB" available of "1.3GB" available, because mmcblk0 is divided into about 20 partitions that are using the other ~900Kb. The "1.2GB" "Internal Memory Available" reported by the Android is mounted to /data.
Anyway, the 2203648Kb number is interesting because it is larger than 2^31 (2GB in base 2). This in turn, implies, the Android 2.2 configuration on the G2 is not using all of the "internal mmc" since 4GB = 2^32.
So, either someone willing to root the phone in order to get at /proc info that is not available to non-root users or a tear down and listing o the part numbers will settle the issue.
Oh, and I used "Android Command Shell" from the Market to obtain the /proc information and confirm what some other tools were saying.