1. Turn off your G1
2. Hold down the home button, and while you do this press the end button to turn the phone on. keep the home button held down while it turns on for about 5 seconds.
3. You should see an exclamation point. Hit alt-L, then you'll see a menu.
4. Hit alt-w to do a factory reset/wipe. It might ask you to hit the home key to continue. Do this.
5. Once it's done wiping hit home+back or select the top option to reboot. you might have to hit the home key again to complete this.
That should fix you right up =)