At least on the Rogers Dream (Canadian version of the G1) Cyanogen and similar are the ONLY way to run the phone well..
With the stock firmware timestamps are broken (as in text messages showing up in the wrong time zone, making the sorting of a conversation all wrong) and Performance is miserable.
By contrast Cyanogenmod more than solves these problems, transforming it from a badly flawed phone that makes Android look really BAD, to an excellent that makes android look great.
I'm not exaggerating when I say that, given what a poor job rogers has done resolving serious bugs like the timestamp one, I would never buy another android phone from Rogers, if I were going to be stuck using the stock firmware. However, as long as the modder community remains in play, I am a happy user who would be happy to buy a new device that came out.
I guess my point is, if google starts to shutdown the modders, they really are actually pushing customers (well, at least one) away.