According to news posted in many sites included Android Community, the Android Cupcake has been released OTA.

Android Community is hearing from multiple T-Mobile G1 users that Android 1.5 “Cupcake” is being pushed out as an OTA upgrade.  The system update, which was released officially to developers earlier this week, will be rolled out to handsets throughout May, according to one report.

This upgrade comes with Video Recording, on screen keyboard and many other features that G1 owners have been waiting for.