Quick Solution: I found that after a few days/weeks of normal use, the battery indications were more reliable and appeared to last longer. Possible reasons include power-saving practices and charging.

The Whole Story
The HTC G1 has a small Lithium-Ion battery.  I was disappointed on the first few days because it seemed to have a small capacity and take a long period of time to charge.

About Lithium-Ion batteries

For consumers and users of these batteries, the important thing to remember is that Li-Ion batteries do not have a “memory” like some types of batteries do.  This means that you can recharge the battery even if you have not already fully discharged the battery, and you battery will not “think” that it has a smaller capacity.

Continuing the Story

Even though the “memory” effect is not supposed to be a factor, I did find that after a few charge cycles (over a week or so), my battery seemed to last longer.  The first few charges, I did run the battery until it was depleted (Android shut down).

Other factors include the fact that I was using Locale to do things like dim my screen from 6pm to 6am (because at night the screen is too bright).  I also used Power Manger to be extra conservative when below 15% battery.  As a default, I have GPS off, Cell Location on (so that I can use Locale’s geographic features), WiFi off, and Bluetooth off.

Conclusion

I am ok with the T-Mobile G1 battery life now.  I usually plug it in when I sleep… otherwise I might get 1.5 days of light use out of it.  Of course, it goes without saying that I want more than that.