My g35 temp guage never goes up to 1/2. I recently replaced the thermostat thinking that was the issue but the issue still persist. I also checked my coolant temp with a scan tool and my temp is at 88 to 89°c which is right in the good range for these engines. Both upper and lower rad hoses are warn also. Any ideas?

I'm pretty sure your temp gauge is working properly. You've confirmed the actual coolant temp is good so I don't think there's a problem. I seem to remember our '05 and '06 Gs normally displaying temp at about 1/3. It gives you more of a chance to notice if temps start climbing. There is a "test mode" which will run your gauges through their full sweep - but I can't remember how to do it. Maybe somebody else here can describe that for you.

Yeah my normal operating temp always stays at a little under halfway.

It sits below half on purpose but not specifically for that reason, it just seems to be an industry agreed upon standard. The temperature is actually fluctuating all the time and the gauge is dampened to prevent small deviations from being noticeable and panicking the average driver. It's probably less of a temperature climb from where it normally sits to the high end than you would think. And anything above half means you definitely have a problem!