Apparently Froyo could make it possible for the G1 to be updated, because apps can be installed on the SD card. I wonder if they will actually provide an update.
I'm running Android 2.1 on the G1 courtesy of the cyanogen mod (http://www.cyanogenmod.com/). Its been very snappy and has surprisingly had minimal bugs for a beta release.
I can confirm your experience. Heres hoping for a 2.2 release soon though!