While the hardware of the T-Mobile G1 can support multitouch, and the users certainly could deal with it, neither HTC nor Google themselves gave the smartphone the ability to recognize more than one simultaneous touch. Now that's all changed, thanks to coder Luke Hutchison, who has put together a multitouch hack for the G1. As you can see in the video demo, the hack adds pinch & spread zooming to the G1's browser, together with maps support, replacing the usual zoom controls.
Right now this is more a proof-of-concept than anything else, though it's usable, and needs OpenGL acceleration support and kinetic scrolling (where the page continues scrolling after you "flick" it) before it will go as smoothly as multitouch on the Apple iPhone is. Installation is not for the faint-hearted, either, requiring a reflash of the G1's hardware and the potential risk of bricking your smartphone.
If you're brave, the full instructions are here. The hacked apps - Browser and MapViewer - also include accelerometer-linked screen rotation, so you can use them in landscape mode without needing to flick out the keyboard. There's also a photo browser with multitouch support.