Steve Schultze, Associate Director at the Center for Information Technology Policy at Princeton University, accuses HTC of violating the GPL with the G2.
Perhaps HTC (and T-Mobile, distributor of the phone) should review the actual contents of the GNU Public License (v2), which stipulate the legal requirements for modifying and redistributing Linux. They state that you may only distribute derivative code if you “[a]ccompany it with the complete corresponding machine-readable source code.” Notably, there is no mention of a “grace period” or the like.
One of the commenters points out that Android licensing is a bit more complicated.
Google uses Apache license for most of Android, which gives freedom to developers (carriers), including freedom to make product closed for users.
GPL (used for the kernel) has opposite goals and gives full freedom to users by limiting freedom of developers (so carriers are not allowed to make source of distributed kernel secret).
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