After a lot of work from a lot of people, CyanogenMod 5.0.7 is out for your Dream and Magic (Fender/MT3G 1.2 also) phones! This is Android 2.1 (Eclair). It’s not without quirks, but it’s more than capable of being your daily driver.
You might also want to check out the CHANGELOG.
And HI to our friends at XDA Developers!