The new version of the Android platform - 1.5 "Cupcake" - is now being shipped with the new HTC Magic phone from Vodafone and is also already available for some versions of the HTC Dream/G1. Since an OS update in the field is aways a scary business - T-Mobile is likely going to take it slow to upgrade all of the reportedly over a million sold G1 phones.
Cupcake seems to be a relatively minor major release - a few significant new features (on-screen keyboard, video), some UI face lift and some improvement behind the scenes (battery life, performance).
For my own use, there are two features which have made the upgrade to Cupcake a big deal for me.
The touch-screen virtual keyboard is the big one. I have never been a big fan of the G1's hybrid touch-screen plus keyboard design and the virtual keyboard is more than good enough for me. In fact it is a lot better, since I for small text input, work flow from touch-screen navigation to text entry and back is a lot quicker and smoother than before. Since the upgrade I have not used the physical keyboard any more and would be more than happy to loose it...
My second most favorite new features is the support for bulk operations in the gmail app. Like in the online interface, there is now a row of check boxes in the message list and if you start checking them, a set of operations like bulk-delete or bulk-archive becomes available. I do get a lot of email on my account and this kind of rapid triage is important for me.
I don't particularly care about being able to record video on my cellphone or have home-screen widgets, so many of the other features are lost on me. Since I don't have two phones to compare side by side, I am not even sure anymore what has really changed.
Battery life is probably better, but still somewhat of an issue, but since I have wifi on all day and use sync to a busy gmail account, I can't really complain. I get through a day on one charge, which is pathetic for a regular feature phone, but not bad for a portable computer.
Most of the apps I use are still working - including the ones I wrote myself. I had to do a small update for BistroMath to fix some issue with how the keyboard and landscape mode was detected (with Cupcake, the keyboard is always there...). I was mildly surprised, that NetMeter still works without a problem, since it uses non-standard APIs by going directly to the /proc filesystem of the underlying linux kernel for much of the information.