That's the latest version of the OS, and the one running on the so-called Google phone (the HTC Nexus One). One might think it would be a stretch for the G1 to run that OS, based on its age (it was launched in Oct. 2008, an eternity in tech), but that's the rumor.
However, some of those phones that receive the upgrade will have to do a PC-based install (which is quite familiar to those running Windows Mobile or even iPhones, which don't receive OTA RMO updates). That's not really that big a deal, but some of them will be wiped in the process (also not that unfamiliar to WinMo users).
However, much of the data stored on your Android device is stored in the cloud anyway, with your Google account. The biggest issue here would be reinstalling applications. Still, many would probably go through the trouble, assuming the upgraded phone would run efficiently, which would be a question for the oldest among them, like the G1.