this is something i have wanted to do since the moment i got my G1. i stumbled upon
this article and proceeded to do
exactly as it says. there are plenty of posts within the android community forum on how to install the Android SDK, Eclipse, etc. now, i'm not so certain you need to have the Eclipse IDE installed, but again, i did just as that article stated.
there is something the article failed to mention - you need to put your G1 in "Debug" mode when connected via USB. this is done via Settings > Applications > Development > USB Debugging...
when you connect your G1 and select "Mount," Windows will find new hardware - you need to point it to where you have extracted the Android SDK files to - there is a usb drivers directory in there. in my case, this was C:\android\usb_driver.
i installed the IDE as stated and set the Environment Variable for Path (this is very important when attempting to integrate apps/programming environments). again, i can't say this had a direct impact on running the ddms app that does the screenshots, but that's something worth covering.
in a nutshell, install the Android SDK, set the Environment Variable, set your G1 to USB Debug Mode, install the driver via android_usb.inf which is in the \usb_driver sub-directory of wherever you unpacked your Android SDK to and that's pretty much it!
i'm off to waste my time taking screenshots! woohoo!!!