I read somewhere that you need to be sure you are using the USB-->Mini USB cable that either came with your G1 or make sure if you buy a new cable that the MiniUSB side is an 11pin (new) as opposed to a 5 pin MiniUSB, which are more common.
Also, be sure to set your sd card as a mass storage device, the only way I found to check this is using anyCut (from app market) to create a shortcut to the SD card, once you open that shortcut there is a checkbox. To do this, download anycut, then long press on your home screen to add a shortcut, choose shortcut then pick the AnyCut application, form there choose activity, scroll way down to SD Card. Now when you press on the newly created shortcut you should see a checkbox with the text "Enable USB mass storage", make sure it is checked.