Please check your menu key and see if it is stuck. For your phone to boot into safe mode, the menu key needs to be held at power on, so if after turning it off and doing a factory reset you are still in safe mode, then your menu key stuck. I have heard of the g1 having issues with the menu key getting stuck and a replacement is needed. How old is your phone? Are you still under warranty with tmobile? Let me know if you have any other questions.
The menu button may be stuck. Try clicking it a few times. Also try taking the battery out once it is off. Use the on screen restart instead of just holding down the power button.
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