If you enter your PIN wrong 3 times, your G1 becomes "PUK locked" and supposedly you have to call the customer service to get this famous PUK code (which unique to each SIM card and doesn't normally change, so write it down somewhere). Thing is, it's not obvious at all how to use the code once you have it. You have to hit the "emergency dial" button and "dial" this "number":
**05*<PUK Code>*<enter a new PIN>*<confirm the new PIN>#
Normally, as soon as you enter the #, Android should tell you that you have unblocked your SIM card and it will take a short while to reset the PIN (be patient).