Reference

Recovery Images:

These files are used to create a new boot loader. They are used to access the root of your G1 (if its in RC29)

Common recovery images include those by CyanogenMod, AmonRA, or ClockwordMod. There are others out there too, but these are most popular.

Updates (from cyanogen mod)

These files are in ZIP file format.  They must be in the root of your SD card if you want your boot loader to access them.

Here are some useful definitions. Keep in mind these are how I have defined them NOT someone else. There may be some wrong wording but it  should be-at worst-somewhat right.