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Being Android a SO based on Linux it was not a big surprise to see a lot of developers going deep to find all kind of secrets hidden in the source code. According to this post, the T-Mobile G1, or at least part of them, can handle multi-touch. 

The G1 screen can definitely track 2 fingers. Why Android does not make use of this is an exercise for the reader to answer.

But, if you read the whole article you will find at the end that HTC has specified since the beginning the HTC Dream AKA T-Mobile G1 is not a multi-touch device and they could be producing at this moment a batch using screens that do not support this functionality. We even wont be able to know if the one we own is capable or not because from what I understand to run a real test you have to replace the current touch driver installed in the device and as far as I know that’s not something that many of us, level 0 in linux users, can do easily. 

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Working as IT Professional since 1994. IT Manager since 1999. Microsoft Most Valuable Professional in Tablet PC/UMPC since 2007. Owner/writer of www.ultramobilepc-tips.com . Published many articles in todoUMPC Magazine, www.todoUMPCmagazine.com, the first online magazine all about UMPCs. Maker of Tweaks2K2, a registry hacking tool for Pocket PC devices (www.tweaks2k2.com).