This has been doing rounds in the dev community for quite sometime and we knew RyeBrye was been working hard to prove that G1 supports multi-touch.
Earlier this week, he posted debug logs of how Android handled multitouch, but that wasn't enough to impress the users in general. Last night, he posted a proof-of-concept video showing off G1's multi-touch capabilities. He will soon post the source for other devs to play and build on it.
[ame="http://www.youtube.com/watch?v=pSBYqmWVqeM"]YouTube - T-mobile G1 multitouch proof of concept video (by RyeBrye)[/ame]