It may lack the retro slick design of its main competitor, the Olympus E-P1, but Panasonic gets it almost pitch perfect with the Lumix DMC-GF1, a jacket-pocket-size interchangeable-lens model with the feel and features that draw people to enthusiast compacts like the Canon PowerShot G11. While it's still not quite suited for action shooting or serious low-light photography, those weaknesses are a lot more forgivable at the GF1's $900-or-so price than the GH1's $1,500 level. However, if you're looking for a kids'n'pets-friendly speed improvement over a point-and-shoot, the lack of an optical viewfinder for continuous shooting is still the main weakness versus a similarly priced dSLR.
I tested the GF1 with both the 20mm and 14-45mm lenses, but unfortunately was unable to get an optional viewfinder for evaluation; the viewfinder connects above the LCD and sits in the hot shoe, which precludes using a hot-shoe flash with it. In general, the Micro Four Thirds lenses used by Panasonic and Olympus' mirrorless, interchangeable-lens cameras tend to be pricey, and there aren't a lot of them yet. You also need to check the specs on the lenses before you buy; Panasonic relies on optical image stabilization, while Olympus uses sensor shift, something to keep in mind if you're mixing and matching systems. Even then, the 20mm Panasonic lens lacks optical image stabilization--some might argue that you don't need it for such a short focal length--and doesn't support continuous autofocus, which you might want for movie capture. (Check out Panasonic's table of lens compatibility for more information.) But both lenses are relatively sharp and comfortable for manual focus.
Sturdily built with a shallow, but ultimately sufficiently large, grip, everything about the GF1's design seems to address the needs of both enthusiasts and people stepping up from point-and-shoots. It offers a lot of features, but as long as you're not a newbie you should find all the controls pretty easy to understand and find, without too much menu diving. For instance, the switch for burst shooting, bracketing, and self-timer is right around the mode dial, more easily found and accessed than on most models.
The camera also offers a lot of flexibility. Unsurprisingly, the GF1 shares much in common with the G1 and GH1, including the unusual seven-frame bracketing option (although with the same drawback of no full stop setting). Though much of the innards are similar to the GH1, there are some differences in behavior. For instance, since they use different sensors, when you select the different aspect ratio options in the GF1 it crops the image instead of preserving the full resolution as the GH1 does. Like the ZS3, the GF1 also offers face recognition. You can register up to six faces in the camera memory with names and birthdays, priority (for AF and exposure), and a custom focus icon. During playback, the person's name appears. However, you can't use this information to search during playback, and it doesn't seem to appear anywhere in the EXIF data for the photo.
The two custom settings slots on the mode dial hold two sets each. Though not as sophisticated as the GH1's Creative Movie mode, the GF1's Motion Picture program mode allows you to adjust exposure compensation and aperture. And a (poorly named) Peripheral Defocus scene mode functions as a kind of wide-aperture-priority mode for obtaining shallow-depth-of-field photos. Panasonic is pretty good about giving you direct access to the most frequently used shooting controls. The navigation buttons bring up white balance (including two manual slots and color temperature), ISO sensitivity, AF mode (face detection, tracking, 23 area, or single area), and a function button to which you can assign film mode, aspect ratio, quality, metering, intelligent exposure, and a few display options. The Q.Menu button pulls up the rest of the important settings: flash options, color/film modes (standard, dynamic, nature, smooth, nostalgic, vibrant, plus black-and-white versions of standard dynamic and smooth), stabilizer options (active, on prefocus, and y-axis only) used in conjunction with an optically stabilized lens, still- and video-recording quality, LCD brightness options, and duplications of some of the direct-access control options. If you don't want to use the full onscreen display, you can also set the camera to display the settings around the edges of the screen and cycle around them that way.
You can also preview changes to settings such as aperture and shutter speed, to gauge the effects in advance; though it's somewhat hard to see depth-of-field changes, and you can only get a general sense of the shutter speed effect because of the LCD refresh, the capability to preview exposure may be invaluable for some. The implementation on the GF1 is better than on the GH1, since it doesn't require jumping into a special mode. My only gripe with the design is the rather small, hard-to-feel movie record button.