Try removing the micro-SD card (For N1 Android v2.3.4). For my case the phone will boot up normally and work as per normal. I am still wondering why, probably caused by some program that I updated via Market. Previously it was working fine. But recently, to free up some space, I tried to move most of my apps to SD card storage.
Currently I am trying to read the micro-SD card via an external reader. Planned to wipe the card clean after backing up the data and putting it back to N1 and try to boot up with it again.