The GX1 delivers some of Panasonic's best photo quality to date, but the JPEG processing still needs a bit of work.
While there are still some issues, the low ISO sensitivity noise on the GX1's JPEGs is visibly better than the rest of the G series, though the in-camera processing could still be a bit better (see subsequent slides). In good light, you can shoot JPEGs up to about ISO 400 without serious detail degradation, although even at ISO 200 you can see some softness.
Even at ISO 160 (the GX1's lowest), shadow areas still display the blue-channel artifacts that tend to plague Panasonic's JPEGs, appearing as yellow blotches--look at the text on the left side. (It's a lot easier to see the problem if your monitor is calibrated to Adobe RGB rather than sRGB.) Processing raw files makes a big differences in clarity even at this low a sensitivity.