The G1 displays very good noise performance up to and including ISO 400. At ISO 800 you can see some softening in the foreground detail, but the background detail--i.e., the tape measure--holds sharpness very well until ISO 3200. Depending upon the content of your scene, the G1's photos can be usable across the entire ISO sensitivity range.
For shots such as this, which was taken at ISO 3200, the G1 can match most midrange dSLRs. It has minimal color noise, and the luminance noise looks much like grain. It does a very good job preserving the colors as well.
On the downside, Panasonic doesn't offer a preset mode for producing accurate, natural color. These shots were all taken in Standard film mode, the default, and while they're relatively accurate it looks like the saturation was pumped up just a little. (The shot of yellow flowers was exposure adjusted.) But the colors are certainly pleasing.
The G1 seems to chronically underexpose. The top shot, spot metered off the white flower, should be gray, but not quite so dark. To get the appropriate exposure (bottom), I had to meter off the red flower in the back. There's a 1 2/3 stop difference between the two, where it should have been 1 stop at most. (Top f10, bottom f5.6; both 1/50 sec, ISO 400)
The G1's 14-45mm kit lens displays some atypical distortion at its widest end--only vertical, not horizontal. Rather than curving to form barrelling, the horizontal lines remain straight as they get squeezed toward the left side of the frame.