It's really thin glass so this is a standard problem with G1s (my roommate's phone is cracked even worse).  It's cracked right across the cover in a couple of places where the glass is glued to the plastic back (i.e. not even over the lens opening).  There's a tiny crack over the camera aperture but it doesn't go all the way across and doesn't seem to impact pictures much.  Here's a couple of recent photos with the lens in the current state:
http://picasaweb.google.com/luke.hutch/DropBox?authkey=Gv1sRgCJzZxNWBsarKaw#5421223526172002114
http://picasaweb.google.com/luke.hutch/DropBox?authkey=Gv1sRgCJzZxNWBsarKaw#5421223458140560066
i.e. standard low cellphone quality.  (Most of the glowy lens flare on the second image is probably from finger grease on the camera cover.)  I can take a photo of the lens cover for the guy if he's really worried.  If I were him though and I were worried about it, I'd just break the glass off entirely and replace it with some thin perspex or something, the camera itself is fully functional.


There's a hairline crack (almost unnoticeable unless you squint) in the case  at the front on both sides of the trackball hole, but that part of the case is so rugged that the structural integrity is completely unaffected.  Everything else about the phone is fine, other than minor pocket wear.  If he's just getting the phone to develop on, he'd be more than happy with it.  Even if he wants it as his primary phone, it would work fine, I use it every day.