I agree with you: the G1 (and G2!) is a very capable device. As Android is adopted by more and more device manufacturers, Android could very well become a ubiquitous, ambient computing environment.
The reason I focus on the iPhone is for two reasons. First off: it's hardware. No matter how good the G1 is, the crux of the phone is it's OS. That's the standard being pushed in that case. With the iPhone, they're pushing the hardware and software standard.
Second (and this is by far the larger reason) is the install base. There's 40,000,000 iPhones and iPod touches in the market! The ubiquity and large adoption of this device is why it's "White Label." People already have it. For comparison, as of Jan 09 the X-Box 360 had ~28 million units in market. A large % of which might not even be on X-Box Live.
The penetration of the iPhone is what makes it special in this case.