It does say in the user guide that the LED will flash green when there are notifications, but who ever reads that. :P
It would be nice to be able to select if the trackball should light up, in which interval and for what notifications. The green led will blink on any notification, not just email and missed call.
I came across an app called SMS Popup. It can change the color of the LED for SMS and MMS notifications in addition to the other great options of popping the message up on the screen and giving you reminders of unread messages.