It's no secret that Apple and Google are quite chummy. They have a fairly good working relationship which may explain why Google complied with Apple's request to exclude multi-touch from the Android feature-set. If you are even remotely familiar with Apple's iPhone, you will know that multi-touch allows for multiple input on the touchscreen at the same time, allowing for "pinching" and "stretching" images on the display. You can read more about this at our sister site, The iPhone blog.
Palm has made no such attempts to play nice by offering their own multi-touch on the upcoming Palm Pre device, where they may have painted a big patent-infringement bulls-eye on their back for Apple to take aim. It will be interesting to see what Apple actually does with the Palm situation, but given Google's compliance with Apple's request, they may sit back comfortably with a tub of popcorn and watch the fur fly, so to speak. Personally, I would LOVE having multi-touch on my G1. It's not a deal-breaker, but it's easy to get spoiled after using an iPhone for a while. Maybe Google has played their cards right by serving up an open OS so that some nameless, faceless developer out there can serve up some multi-touch, 3rd-party-style, and skirt the legalities altogether?