Normally drupal.org inserts version information when a project is packaged. Git repositories do not contain this information. Git Deploy hooks into the Drupal update system and attempts to provide the version of modules and themes checked out of git.
The 2.x version of git_deploy is recommended because it is much more stable but it does require the git binary and the ability for PHP to execute shell commands. The 2.x branch also introduced a new numbering scheme allowing for PHP version checks to work during development.
The 1.x version runs entirely in PHP but requires the Glip library be installed. Glip isn't feature complete so you will encounter errors with some git repositories. This is why there is no stable release of 1.x.
An alternative to using git_deploy is to install modules and themes using the "drush pm-download" command with options "--package-handler=git_drupalorg --gitinfofile". This performs a git clone and checkout and then inserts the desired version information into the .info file. The "drush make" command will automatically write packaging information without additional options.