The photo quality from the ZS7 is very good to excellent with the understanding that this is a compact camera--regardless of its features. Photos at ISO 80 and 100 are great; they're sharp with nice color and fine detail. Jump to ISO 200 and subjects get slightly softer, but still very good. At ISO 400, noise starts creating color issues including yellow blotching, though detail remains good. Going up to ISO 800, photos get pretty bad; they're soft and yellowy with visible noise. Forget about ISO 1,600 unless you're shooting in black and white and don't mind graininess. In other words, if you're looking for great low-light photo quality or if you typically do a lot of heavy cropping, the ZS7 will disappoint.
The inset photo was taken with the lens fully extended. The larger photo is a 100 percent crop at ISO 160. The hawk looks very digital, flat, and painterly. If you were to crop in on just the hawk the resulting 8x10 print would show these issues. But, don't cut that much away or attempt to make a really large print and the results look good.
The camera's new processing engine--Venus HD II--brings with it an Intelligent Resolution feature that automatically detects outlines, detailed texture areas, and soft gradation areas and performs "optimum signal processes" to each area. I've been thinking of it as smart sharpening and it definitely works. On the left is with the IR off, the shot on the right is with it on. With it on, the yarn has more texture and looks sharp and clear. Occasionally shots appeared oversharpened and crunchy, but in general the results were very good.
Panasonic uses the Intelligent Resolution to improve the photos taken using its Intelligent Zoom, a digital zoom that extends the range of the optical zoom from 12x to 16x by cropping in on the center of the frame. Take a picture using the Intelligent Zoom and the camera automatically applies IR. The outcome is a better digital zoom, but it's still not great; fine if you really need to get a little closer, but not something you'd want to rely on. The photo at the top is taken at the optical zoom 12x limit; the bottom is with the 16x Intelligent Zoom. (Photos on left are 100 percent crops.) The IR again does a very good job of enhancing edges and textures, but it also leans toward crunchy and oversharpened.
As long as you're shooting at ISOs below 400, colors are just shy of accurate and overall rich and pleasing. Exposure is also very good. And if you're not happy with the results there are controls for adjusting sharpness, contrast, saturation, and noise reduction.
If you're wondering why you'd want GPS information attached to your photos, here's an example. I pulled up test shots tagged with locations in Google Picasa and the software will map exactly where the shots were taken. For everyday shooting, it's probably not as exciting, but if you do a lot of traveling, hiking, or other activity where you might want to remember where you were, then it's a great feature to have.
With the ZS7's shooting features there's plenty of opportunities for experimenting. Panasonic includes a few scene modes to add to the mix, too. For example, this is the Film Grain mode that boosts sensitivity to ISO 1,600 and captures in black and white. These aren't new options, but they are full resolution; it used to be limited to 3-megapixel photos.