As the two phones are closely related spec-wise, for me it was all about the keyboard. I tried the G1 and struggled with the slide out keyboard, my first finger covering the width of three to four keys (which have to be pressed). I then tried the Magic (assuming the virtual keyboard would be a nightmare) and was surprised to find typing so quick and easy, though would advise landscape over portrait.
The other factor was data allowance, the G1 on tmobile (1gb) or Magic on Vodafone (500mb). My decision in the end was made for me as for some strange reason tmobile would not trust me with a contract. I explained that my credit rating was good and I had no problems over 3 years with o2 or Vodafone, but they didn't want to know.
As a side note, when my contract is up I would consider getting a tmobile sim-only deal purely for the double data. But as Orange have bought them out would that mean data allowance going down to the 500mb that Orange offer? I asked someone at an Orange shop but he looked at me as if the lights had just gone out. Perhaps it was his first day. I am thinking ahead because I can't see me ever needing any other functions that the HTC Magic doesn't already offer.