I had a “T-Mobile MDA Vario II” (HTC TyTN 300) which was similar, and also had a collapsible stylus which lived in a little hole on the bottom. It was Windows Mobile, but it was great having the keyboard fully accessible (without that extra bottom bit the G1 had).
It looked like this, just less German:
The phrasing of “First actual case of bug being found” definitely sounds like it’s a reference to an existing term. Nowadays maybe people would say “a literal bug lol”.
Edit: to be fair, OP doesn’t say that Hopper invented the term