In my most recent game, London fell G2, France fell I3 (GB reinforced Paris instead of preparing for the incoming Sealion). The Axis won. But that was more a result of the USA playing poorly than a result of London falling so early.
I think that if G1 attempt on Paris fails, people should at least play out the rest of the round. Depending on how much damage the Germans do, Italy has a fair chance at taking Paris before France can build any units.