and it works fine. The reviews typically say the images are "soft" for the Dimage pocket cameras but they look fine to me. All you have to remember is to keep your left hand fingers away from the lens.
Some new cameras have internal zoom lenses that don't protrude. The Sony T1, the Konica Minolta X50, the Nikon Coolpix S1. It's a great concept, I'd think that it would help prevent dust from getting into the camera and possibly mitigate camera-shake a little for those of us with bad hands (by reducing the length between the lens and the camera's axis of rotation when it shakes).
So how does it work out in practice?