It has been superceded by the G2, but the G1 seems only marginally less capable

As a current owner of the G2, and a previous owner of the G1, let me say that you should definitely go for the G2. I did tons of research before buying the G1, as well as listening to another friend who also did tons of research. At the time, the G1 was THE camera to get, in terms of quality and features. So, I went out and bought the G1.

Then, about a week later they announced the G2. Basically, the G2 is the G1 with all the bugs fixed and tons of wishlist items added. I, of course, quickly returned my G1 and patiently waited for the G2. I got it only a few weeks after it came out.

Let me tell you...the differences are subtle, but worth the extra money. Things such as the histogram view, the much improved manual focus, and the fix for the chromatic aberration make the G2 worthwhile.

Also, if you read on the Canon forum on dpreview.com, you'll see that everybody recommends the G2 if you're buying a new camera, but not to upgrade if you already have the G1.

And if price is an issue, I HIGHLY recommend doing the AMEX Price Match. Basically, on their higher end cards, AMEX does price protection up to $250. All you do is buy the camera with your AMEX card, fax them a printout of a lower price, and they send you a check for the difference. I bought my G2 for $875 when it came out at a local shop. I faxed a price of like $600 later, and received a $250 check two weeks later. So, I got the G2 for $625 and from a local camera shop.

I hope all the info helps your decision.