Nikon took its time introducing its interchangeable-lens camera system, dubbed the Nikon 1 series, and though I don't agree with a lot of the choices the company made, it clearly put a lot of thought into the cameras before rushing out me-too versions of competitors' products. The entry-level model, the J1, firmly targets point-and-shoot upgraders with its feature set, but the implementation is a mixed bag and the price is a bit steep for that crowd.
Take for instance, the sensor, which is smaller and lower-resolution than all but the even-more-expensive Pentax Q. With a 2.7x focal-length magnification factor, that means the kit 10-30mm lens has the equivalent angle of view of 27-81mm. In practice, that will severely limit your options for real wide-angle shooting--even more than Micro Four Thirds does--as well as your ability to get even moderately shallow depth of field on typical portrait shots. That stuff may not matter to a person paying $400 for the camera, but it might to someone paying $600.
And I have to point out that as one of the companies pushing 16-megapixel sensors out to consumers, it takes guts for Nikon to try to sell them 10 megapixels in a higher-end camera (though it's quite sufficient for printing up to 8x12 on a Canon or HP printer or 10x16 on an Epson).
Ultimately, the photo quality is very good--and occasionally excellent. Its noise profile is just OK, though, at least for JPEGs. I started to see some stippling as low as ISO 200, but as with Panasonic's cameras I suspect they're the result of JPEG processing rather than native to the images; the only really clean setting is ISO 100 (I'll revisit the raw results when the Adobe Camera Raw codec becomes available). I started to see color noise at ISO 400, and by ISO 1600 detail began to degrade. I think the J1 handles color more accurately at the higher ISO sensitivities than many competitors, but I'm not sure this crowd is looking for color accuracy or the desaturation you see in low light so much as they are looking for pop.
However, in all other respects--notably lens sharpness, exposure and metering, and color--the J1 delivers consistently and accurately. The tonal range doesn't look particularly stronger than that of competitors, but I suspect it's compressed out of the JPEGs or may only be used for raw files.
The video quality is also quite good: sharp and saturated. And the autofocus system works exceptionally well--quickly, quietly, and accurately--when shooting video. The stereo mic acquits itself well, and there are a few sound-level options and a wind filter.
The performance rating of the J1 was a really tough call. Ultimately I came down on the side of excellent, because it really does feel pretty fast. On one hand, it's got the least shot lag--time to focus and shoot--of any camera in its class, plus a fast burst rate. But then it gets bogged down a bit on sequential shots, which slows down your overall shooting experience. It takes about a second to wake up and shoot, which is just OK. The roughly 0.2 second to focus and shoot in good light and 0.4 second in dim are both excellent times for any class of camera. And the center-point autofocus is quite accurate, as well as fast. But the shot-to-shot time rises to about 1.1 seconds--1.3 seconds if you're shooting raw--which isn't horrible but is comparatively slow. Add flash and that rises to 1.6 seconds. Its 5 frames per second in standard burst mode is also very good, and the camera allows you to start another burst quickly (rather than pausing while it saves to the card).
Other aspects of the performance drag it down a little, however. In the complete auto AF, it selects the focus points quickly, but inconsistently; for any given scene, it will choose different sets of points each time you prefocus. Plus, the battery life is pretty short. The LCD is typical--a little reflective in bright sunlight but otherwise fine.