First off, I want to say that I LOVE my Android based G1!! It is the best phone I have ever owned!
Ok, with that being said, I was driving home late one evening and ran into the horrifying issue of "Your SIM card does not allow a connection to this network" which is apparently specific to the G1... Some people have reported that they receive this while roaming but as far as I know, I was never in an area of roaming...
In attempting to troubleshoot the problem, I tried changing from 2G to 3G, no luck, I tried rebooting with still no luck, so when I finally got home I did some research and found a suggestion that "airplane mode" might be causing problems. I fiddled with the airplane mode and still no luck...
A while back, I had downloaded a program off the market called "Any Cut" (Old Method... See Current Method Below) which basically lets you create a shortcut to just about any aspect of your phone, even system info areas that aren't accessible from the main settings menu. One of the shortcuts I created was "Phone Info" which shows all sorts of cool network info about your provider (mine being T-Mobile). While it is cool to see lots of numbers and letters, it really doesn't do anyone a whole lot of good unless they know what the stuff means. One area of the "phone info" shows the data connection statistics for the data plan and I noticed that while I wasn't connected to a network, It seemed as though I was connected to the internet. I usually have "auto-sync" turned off to save battery but figured I would turn it on to see what would happen, but still being skeptical. Next thing I know, I get a "new e-mail" notification! (but still no voice service)
So, what does this have to do with fixing the problem of "Your SIM card does not allow a connection to this network"? Well, I don't really know what it all means, or if it will fix your phone or not, but I will tie the "Any Cut", "Phone Info" and "Auto-sync" together in hopes that it might also help you.
Current Method
Update 2012/01/17: I want to note that I've learned an easier method for accessing the phone info outside of anycut. You might give this a try first before downloading AnyCut. (Instructions below under the "Archive Method" heading)
1. Open the phone dialer
2. Enter: *#*#4636#*#* (Once entered, you will be taken directly to a "Testing" page) [4636 spells INFO]
3. Tap Phone Information
4. Scroll to the bottom of the screen and you should see a button that says radio off. Hit this button and when it reads radio on Hit it again to turn the radio back on. <-- (Not a Typo)
I'll also note that you should check the "Set preferred network type" setting. Something weird might have happened and this setting is no longer correct. Changing it "shouldn't" hurt anything, just remember what the original setting was incase you think you should go back to it and I personally haven't had any luck with changing it on my GSM carrier (it just defaults back when I exit the phone information screen), but I've been able to change it on CDMA carrier phones and it will stick with the new setting (This is largely due to being able to completely turn off 4g and force the phone to 3g which saves battery). If you are unsure what your carrier is, you can probably do a google search and figure it out pretty quick.
The following is a list quoted from a guy named pjmo of what the different options mean: (link to original content no longer works...)
For simplicity, there are two main types of cell carriers, GSM and CDMA. The following popular data communication technology is associated with each cell carrier type:
GSM = GPRS (2g)
EDGE(2g)
UMTS(3g)
WCDMA(3g)
HSDPA(3g) {Cell Carrier examples: AT&T and T-Mobile}
CDMA = CDMA*(2/3g)
EV-DO(3g)
WiMax(3/4g) {Cell Carrier examples: Verizon and Sprint}
Now that the general stuff is out of the way, here's my take on the Preferred Network types:
WCDMA preferred - The GSM phone is capable of using both 2G and 3G data communication and when signal strength is low 3G is favored more.
GSM only - The GSM phone is capable of using only 2G data communication. When the 2G signal is too low you get nothing at all.
WCDMA only - The GSM phone is capable of using only 3G data communication. When the 3G signal is too low you get nothing at all.
GSM auto (PRL) - The GSM phone is capable of using both 2G and 3G data communication and when signal strength is low 2G is favored more. This one is a bit confusing to me since PRL is associated mostly with CDMA technology and not GSM technology.
CDMA auto (PRL) - The CDMA phone is capable of using both 2G and 3G data communication and when signal strength is low 2G is favored more.
CDMA only - The CDMA phone is capable of using only 2G data communication. When the 2G signal is too low you get nothing at all.
EvDo only - The CDMA phone is capable of using only 3G data communication. When the 3G signal is too low you get nothing at all.
GSM/CDMA auto (PRL) - Some phones are equipped with both GSM and CDMA capabilities. This setting appears to just have the phone attempt to stay connected to the data communication type that works the best. (Maybe the Samsung Galaxy S will take advantage of this???)
Unknown - If none of the above fit or the phone is acting weird as far as connecting to the carrier, you will see your preferred network type is set to this
Update 2012/08/08: Grant also mentioned in the comments, that you might have to change/set the network provider in: Settings -> Wireless & Networks -> Mobile Networks -> Network Mode (This might be slightly different from phone to phone)
Update 2012/11/07: JayJay mentions in the comments that another possible solution, might be to remove your simcard, stick it into another phone and power it up, then power it back down. Put your simcard back into your original phone and power it up. Let us know in the comments if it helped you!
Update: 2013/09/24: Galaxy S3 users may not be able to use this method... I have a friend who has an S3 and it would not work. It has also been confirmed in the comments below that *#*#INFO#*#* doesn't work. You might take a look at this forum topic for some suggestions, "or" try the older anycut app method I originally outlined below.
Archived Method
1. Connect to a wireless connection and download "AnyCut" from the market
2. Create a shortcut to "Phone Info"
(menu -> add -> shortcuts -> Any Cut -> Activity -> Phone Info) Click "OK" on the "Edit Shortcut" screen
3. Try turning off / on auto-sync
(menu -> settings -> Data synchronization -> Auto-sync) Wait for the sync arrows to appear
4. Go back to the home screen and click on the new "Phone Info" shortcut
5. scroll to the bottom of the screen and you should see a button that says radio off. Hit this button and when it reads radio on Hit it again to turn the radio back on.
After turning the radio off then back on, It took about 5 seconds and I had a connection to the tower again!!
If it works, (or doesn't work) let us all know in the comments so others can see the results!
Edit: 2009/03/22 Ok, as much as I hate to admit defeat... I'm pretty sure this method is a complete bust and it turned out to be pure coincidence that mine was fixed... (I'm betting now it was network issues...) Anywho, I'll leave this up in hopes that SOMEONE might benefit from it.
Edit: 2011/01/25 Read through the comments as several folks have some additional tricks that might work for you.
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