"I figured it out, there is a system application on my phone called Sim Toolkit, I've talked with other Nexus One owners who don't have this application. I have root access on my phone so I used titanium backup to uninstall it and now the notification is gone! so far no side effects :P
I'm on the same network as OP (Vodafone NZ) so I imagine it has something to do with their sim cards having this software bundled with them somehow?"
It looks like it's regarding your Sim card, don't really have much clue beyond that though sorry, Haven't seen it before. I tried booting my phone up without sim to see if it's similar, I get pretty much the same icon but a red exclamation over the sim so it's maybe meaning sim full or something else like that?
I don't have the same phone, I have an Lg Optimus 2x running 2.2.