Android G1 Update
There is still no word processor unless you count Google Docs, which requires an internet connection to work, although I gather that is supposed to change at some point. There is a pretty good text processor suitable for making notes, although with no control over font, text size and the like: AKNotepad. And there is a program for reading books, textonphone, complete with access to 30,000 or so, mostly, I suspect, courtesy of project Gutenberg. It allows you to either read online or download the book and read it off your G1. It still has minor flaws—lines of verse, for instance, get run together—and it does not let the reader control text size or similar characteristics. But still a very nice program. And there has been some progress towards a tethering application, although so far the connection is through the USB port, not bluetooth or WiFi.
Still missing: A real word processor, software to link the G1 to a bluetooth keyboard, software to let the G1 serve as a wireless router that would connect notebooks to its 3G connection, and a web browser that can save to, and read from, internal memory. And while file browsers are getting better, further improvement would be nice.