Got a T-Mobile G1 phone a bit over a week ago. I can write software for my phone, so this counts as a new toy. :)
Drove out to south-western Colorado from southern California, yesterday. Was curious how the GPS in the phone would perform. The answer: not very well. Could be the GPS hardware in the phone is not very good. Something about the heuristic in the GPS software is almost definitely not right. There were long periods where the GPS seemed unable to determine the current location. There were times when the GPS would seem to be at the right location - then would suddenly jump to a few miles from home (hundreds of miles from my then-present position). Could be that the GPS has trouble in a moving car.
Another downside is that T-Mobile has poor coverage on much of the route (the I-15 to the I-70, then south in western Colorado). When the GPS could find my position, often Google Maps could not get a connection to download map tiles.
There is a need to download and cache map tiles over a pre-planned route.
If the GPS heuristic for dealing with moving vehicles and spotty satellite reception is poor (assuming that was the problem), then there is some hope a later software release from Google will offer improvements.