With the phone off and the battery in, press and hold <power>+<back> for 20 seconds or so. You'll get the standard G1 splash screen, then a screen with an exclamation mark.
Press <alt>+<L> to get to the System Recovery screen. Here you're presented with four options:
reboot system now [Home+Back] apply sdcard:update.zip [Alt+S] wipe data/factory reset [Alt+W] wipe cache partition
Which you should be able to choose from with the scrollball or use the key combinations for.