In the last 6 years I've used a couple of compacts which I've since got rid of after upgrading to DSLRs (Canon XT and then 40D). For a while I was waiting for a compact that I could carry with me anywhere I want, and particularly to parties and other social occasions where bringing a DSLR is really not an option.
When this camera was announced it really looked like a dream compact for me. Fast, wide and optically stabilized lens is ideal for low-light indoor shots. The design is stylish and beautiful, the camera is quite compact and it has all the controls an advanced amateur would need.
Further the sensor is essentially as big as they get in compact cameras and with almost reasonable 10mp (still about 5mp too many but not as bad as 12-15mp you would get in any other compact with a comparable sensor).
I've had the camera for a couple of weeks now (and shame on Amazon for not having it in stock a month after it appeared in some other big stores). I like it a lot and the camera delivers on most of Panny's promises. Here are some of the experiences.
1. The image quality is certainly and noticeably better than the ulracompact cameras (like Panny's own FX series). It is however still a compact camera ... meaning there is visible noise even at ISO 80 and lots of noise at ISO 400. However noise reduction algorithms seem to be doing quite a good job and ISO 80 pics look very nice ... sometimes almost like a DSLR. And even at ISO 400 most shots are good enough to keep. In general the output from this camera is comparable to my 40D at 8 times the ISO (that is 80 on LX3 is about 640 on 40D and 400 LX3 is a bit better than 3200 on 40D). Fortunately, with fast lens and image stabilization I almost never need to use ISO above 400.
2. The camera is very responsive and the autofocus is fast and seems accurate.
3. Changing ISO through the menus is a bit of a pain but a variety of useful ISO regimes are provided. In general controlling all the options is not very easy ... but I guess that's the compromise you get with such a small camera with a large LCD.
Update: it is possible to simplify ISO changing by reassigning a button for this purpose. The drawback of this is that now reviewing pictures becomes more cumbersome.
4. Aspect ratio switch on the lens is more useful than I thought ... saves quite a lot of cropping.
5. Shooting in RAW+jpeg is fast enough to be usable.
6. The camera is quite a bit bulkier than it might seem (and the given dimensions are misleading since they do not include the lens and other protrusions from the main part of the body). It is not shirt-pocketable both because of its size and weight ... but fits fine in a jacket pocket or purse.
7. The macro capability of the camera is really excellent.
8. Having user customizable preset regimes on the dial is very useful and quite a luxury not present even on Canon XSi DSLR (shame on Canon!)

Overall it's a great compact camera: in my opinion certainly the best on the market by a margin (I've studied the market very thoroughly). It is in the same league as Canon G-series (which I owned back when they were the best and liked a lot) but fits my current needs much more than a Canon Gx. I also think it's a real bargain at around $400.
But it is still a compact camera with a sensor 1/8 area of most DSLRs and 1/20 of full frame (mostly pro) DSLR. So those expecting miracles like close-to-DSLR quality or usable ISO 800+ might be disappointed.
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A quick update in response to a comment:
1. At widest setting of the zoom there is quite significant distortion especially noticeable in 16:9 regime. There is also noticeable loss of sharpness in the corners. This might not look good in some shots (like if a straight like or someones face is close to the border) but nothing too bad for most of the shots.
2. HD video is very good for a compact. There is no zooming, no auto focus and sometimes exposure adjustments are not very smooth. So I'd not recommend to treat it as a camcorder. But overall it gives detailed and reasonably smooth video (well not quite 30fps smooth). I've just made a quick comparison with Canon HF10 dedicated compact camcorder (which is as good as they get these days). In bright light LX3 cannot quite match the 1080p detail of Canon. But in relatively dim light it is about as good. Also LX3 has a huge advantage in wide angle. All dedicated consumer camcorders have widest angle around 40mm which is much worse than 24mm of LX3.

Another impression which I have with LX3 and certainly did not have with other compacts is that it is a tool worth learning and investing some time and experimentation. My pics with this camera keep improving even the first ones were already decent.

For anyone interested in sharpness and noise level comparisons with some cameras you can check out
http://www.dkamera.de/testberichte/panasonic/lumix-dmc-lx3/bildqualitaet

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Update Dec 17: Finally Photoshop and Lightroom started to recognize LX3 raws. The quality of my pictures is now even higher: colors much more pleasing and noise reduction less "blotchy". Overall this camera gives results well beyond what I thought to be possible for a compact camera. So it still has my highest recommendation.

Update Jan 27, 2009.
The single most annoying thing about this camera is its lens cap. Having to remove it slows you down. Attaching via a string leaves it dangling ... which detracts from the aesthetics of the camera and can add a bit of extra shake. Without the string it's likely to get lost ... and I have not seen any replacements on sale. Anyway, fortunately, creative peoples found out that Ricoh LC-1 lens adapter can be easily modified to be used on this camera. I've did this and it works much better than the original cap. I've uploaded some pictures of the result to the product images. Use google to find the modification instructions.

First let me establish some credentials. I have been making photographs for 57 years, for personal satisfaction and for work. For 24 of those years, I also ran a part-time wedding photography business. I have been using digital cameras since 2001 and have owned many Nikon digital SLRs (D100, D200, D300) and a number of compact digital cameras.

With that out of the way, let me simply say, "the Panasonic LX3 is the BEST compact digital camera I have ever owned and, in my opinion, there is nothing else currently in its class that even comes close." I feel so strongly about the merits of the LX3, I am purchasing another one to put up for future use. It's THAT good!

Yes, its a bit pricey ..... no, it will not replace a DSLR for some things ..... no, it is not for everyone. Because of the limited zoom range (35mm equivalent of 24mm to 60mm), I would not recommend the camera to those who might need more zoom for outdoor sports, etc. But, if you can live within the zoom limitations, you will find the 24mm wide angle, amazing low-light capability and VERY effective stabilization system to be priceless.

The "iA" setting (puts the camera on "fully automatic") is the best I have ever seen, allowing anyone to routinely make outstanding images. For experienced photographers, the LX3 opens up a whole new world for compact cameras, used when it is not possible or convenient to carry a DSLR or used as a back-up or companion camera for your DSLR.

I purchased my LX3 in September 2008. Since then, my D300 and other cameras have likely felt very neglected! I have posted some sample images on this page.

O.k. Let me start off by saying that I bought this camera via 17th Street Photo's actual store in the photography district on 17th street here in New York City. I called (on Sept. 10th 2008) before I went to the store and I spoke with a super friendly man named Doug who told me that they got the silver and black ones and that they had 50 each. So, I went down there and immediately bought one. They have a 7 days no questions asked return policy so I tried it out like a crazy man. Keep in mind that if you mention the fact that on EBAY they have the price listed at $475, they will honor it in the store even though they have it priced at $499. Anywho, the purchasing experience with them was excellent.

By the way, I've been waiting for Amazon to have this camera too. I pre-ordered both of them (black and silver), and never received an email saying that they were finally available to purchase. So, I took things into my own hands and found it myself (which is explained above).

So, onto the previous testing and my current camera:

Before purchasing the LX3, I bought the fx500 from Panasonic (from amazon.com) and the Fujifilm f100 (from B&H) in order to try those out. I wanted to try the fx500 because of the 25mm wide angle lens, 5x optical zoom, and to see what recording movies at 1280 x 720 at 30fps was like. And, I tried the f100 because I was told at B&H that the f100 was the best non-noisy camera to shoot indoor shots without flash (FYI the best movie option on the f100 was at 640 x 480 at 30fps so I had no desire in trying that). I'll get to the results in a minute. Before those two, I was a Canon Powershot sd500 owner for more than 5 years and loved the camera, but I needed a new one for my honeymoon that is coming up on 10/12 for Hawaii.

Results of testing:

FX500: 25mm wide angle was awesome, 5x zoom was nice but focusing was a problem even after trying to focus 3 times (keep in mind my hands were steady as a rock so it wasn't due to camera-shaking). the movie quality at 1280 x 720 at 30fps was a nice improvement from my powershot sd500's 640 x 480 at 30fps, but in the end the actual quality and sound wasn't as eye popping improvement. Picture quality was very noisy, no matter all of the tinkering that I tried.

F100: yes, the picture quality indoors without any flash with this camera was better and less noisy than the fx500, but I ultimately did not keep this camera because of the poor movie quality, wide angle only goes to 28mm, the LCD is small and it's resolution is horrible.

So, sorry for the wait, but I thought I'd be as thorough as I possibly could about my review before the review.

LX3:

Keep in mind, I'd say that I'm an advanced beginner digital photographer. So, after owning the LX3 for almost a month, I simply have to say that I am SOOOOOOOO happy to have finally found the digital camera I've been looking for. I've read all of the digital camera websites out there, gone to the brick and morter stores to ask specialists directly, gone out and purchased digital cameras to test hands on, etc. etc. to finally come to the pleasure of owning the LX3.

What I was look for was a compact digital camera that had:

-Excellent wide angle: at 24mm, it's the widest I've ever used, and I cannot go back to a camera even with 28mm ever again. the 24mm on this camera is SICK! it blows 28mm out of the park. I haven't noticed any barrel distortion at 24mm. if wide angle is the main thing you are looking for in a compact digital camera, LX3 is where you will need to stop. and it doesn't stop there. if you get the lens adapter and purchase the wide angle lens, you'll be able to even go to 18mm!!!!. I haven't gotten that yet. Oh, I definitely do no mind that this camera doesn't have insane optical zoom options. I'm totally happy with the 24mm-60mm range. I found out that I personally didn't even use the zoom options that much when I had the sd500 canon that it's range was 35mm-115mm.
-Low f-stop: Finally the LX3 is the camera that steps up to the plate to offer an f-stop starting at 2.0. The slowest you'll see on the other comparable camera companies are at like 2.8.
-Excellent indoor no flash quality: If you use the "iA" mode in a low light situation it will most likely automatically use ISO400 to take the picture and in the darker parts of the photo (like shadows, etc.) there will be noise, which is common anyway. But, if you use the "P" or "A" modes and change the "+/-" with the "Q.Menu" joystick, it will lighten up the photo and reduce the amount of noise. I found this out on my own, and I've been INSANELY pleased with the difference. So, all in all, in indoor low light situations, I now use either the "P" or "A" mode over the "iA" mode.
-1280 x 720 HD movie quality: The fx500 had 1280x720 HD quality at 30fps, while the LX3 has 1280x720 HD quality at 24fps. And honestly, the LX3 resolution LOOKS and SOUNDS much better to me than the fx500. Movie after movie that I take, they look and sound amazing. i LOVE the movie HD option on the LX3. My advise, I bought two 16gb extreme 3 sdhc cards from amazon and I'll have no worries about recording speed and space issues.
-Easy to use manual controls: It took me no time to learn them. Easy breezy for a photographer at my level (again: advanced beginner)
-Easy to hold: I actually use the around the wrist cord that came with my powershot sd500 and that's fine. The LX3 comes with a around the neck strap (which I don't use). It does not come with an "around the wrist" cord. Maybe I'll use the "around the neck" strap for days that I would go on hikes or something like that. This is NOT a pocket camera. More of a "around the wrist" camera.
-3.0inch 460k resolution LCD: Best LCD for a digital camera I've ever used, and it's AWESOME. I'd rather have this than a 3.0inch 230k resolution touch screen LCD that the FX500 had.
-South of $500: Bought it at $475, no sales tax.

...and the LX3 met all of those requirements.

CONS: You do need a cap for the lens (it comes with one and a cord to attached it to the camera). Initially, I'd say that was the only semi-annoying thing, but I've already gotten used to it, and it's no biggie at all. It's a little tough taking vertical shots, but again ... not a big problem at all.

Any questions let me know. I've easily taken north of 2000 shots already of all different types. Honestly, I'm insanely pleased with this camera. Oh, I read in another review about noise at iso400. If you really want to keep a shot taken in iso400 indoors without flash and there is still noise in it, there is an AMAZINGLY helpful plugin used in Adobe Photoshop that you can get called "Imageonic Professional Noiseware" that does an amazing job in totally removing it.

Mark.

Panasonic LX3

It's not a world-shaking camera, but it's a good one. I give it 4 stars.

I've been taking pictures for pleasure since the 70s. I've owned a Nikon rangefinder, a Yashicamat 124G, a Pentax 67, and a variety of Nikon SLRs since back in the ancient days of film. Most of my cameras have been fully manual: set the focus by hand, set the zoom by hand (if there is a zoom), set the aperture and shutter speed by hand. All those cameras have separate lens caps, too.

I've also owned several all-automatic point & shoots, and I now own a Nikon D-70, which is my main camera these days. I got my LX3 a couple of weeks ago, and I've devoted a good bit of time to reading the manual and putting the instructions to use on the LX3.

My understanding of most items is that they're all the product of compromises. Some of the compromises work for me, some I can live with, and some are deal breakers. The LX3 has its compromises: the zoom is 2.5X; when you take a video, the camera locks the zoom and focus when the recording begins. I'm more aggravated by this latter compromise - I'd prefer to be able to zoom in and out while making a video, but it's not a deal breaker for me.

The small things I like are the slides and dial for some controls instead of buttons or menus. A sliding switch to turn it on means I don't accidentally hit the power button when I meant to press the shutter release. The slide for the flash means I really have to mean to raise the flash -- it doesn't pop up accidentally because my fingers were in the wrong place. A slide fastener for the battery/SD access means (I hope) a more secure fastening of that door. There's a slide switch to select picture mode or view mode. I also like the rotating dial for modes. I can turn the camera on with it set to video, even though I last used it for still photos. No drilling down through menus as the event passes me by. I use the dial to determine exposure mode (P, A, S, manual, and custom) before I turn the camera on or while it's coming on. In the dark and without my reading glasses, I can see my mode in the LCD; if I change it, it shows me an animation of the dial selecting the modes. I like this, since I can't always read the icons on the dial.

The major selling point for me, though, is the ability to think about what I'm going to do and to do that. This is a camera that rewards thoughtful photography. Do I want to show the slide on a regular TV, a computer, or on Hi-Def TV? I can choose the aspect ratio accordingly by using a slide switch right on the lens. Is the background a distraction so that I want to blur it out? I can choose my aperture and let the camera set the shutter speed. Do I want to take a snapshot of someone? I can choose to have the camera find the face and set focus and exposure on that. Is someone in bright light? I can set the flash to -1 or -2 EV and soften the shadows without overpowering the sun. Is someone backlit? I can choose spot metering and use the focus function and joystick to put the spot to be metered right on the subjects eyes and get a good exposure.

I have set up a couple of specific setting combinations and saved them as custom modes. I can select them using the mode dial (one is selected without further ado; the others require a quick selection from a menu that pops up - slows me down, but not too much).

With my Nikon FM2, all settings are totally manual, and the camera is set up to make it easy: aperture is a ring on the lens and shutter speed is a dial on the body. Twist another ring to focus on the screen through the eyepiece. On the LX3, things are different, so it takes some getting used to. Shutter speed and aperture are manually set using the joystick, so it's not an immediate result. Focus is also done using the joystick and looking at the LCD, and I'm not happy with that yet. Maybe I will be. So far, though, I'm happier setting the focus using the focus button and the joystick to put the focus dot on what I where I want the focus to be and letting the camera handle it. It's slower than my FM2 but faster than using the joystick to manually focus. (And more accurate so far.)

User interfaces are personal. If you don't like the interface on the LX3, you won't like the camera. I like it fine. I'd prefer to have the menu drop me back in to the last-used selection, but it starts at the top every time. I'd prefer to be able to press the menu/set button and have it scroll to the next menu item, but I have to use the select buttons instead. Overall, I give the user interface high marks; there's a quick menu accessible from the joystick which gives you quick access to often-used items.

Some observations: it's a light camera, but it's not small. The dimensions are for the body of the camera, but the lens, even when the camera is shut off, extends from the body almost another inch. My wife has a Canon G9, and the volume of the two cameras is identical if you take the LX3's lens into account. It won't fit in your shirt pocket. I've used lens caps for so long, it's a non-issue for me. I have no problems with the removable lens cap. The Hi-Def videos are excellent. I shoot in RAW all the time; conversion to JPEGs is not much more burdensome than shooting in JPEG, and having all the photo information available to play around with rewards any extra time it takes. Your mileage will vary, but all the options I have available on the LX3 makes using RAW a good decision for me.

Another observation is the barrel distortion at 5.1mm. I've photographed quadrille paper at 5.1mm and 12.8mm at all three aspect ratios. At 5.1mm, barrel distortion in the graph paper is quite obvious. However, in the real world I never notice the distortion in my wide-angle photos or videos. I'm sure other people will notice and be put off by it. The distortion can be corrected by some photo editing applications if it bothers you.

Further, the LX3 has a distinctive lens flare pattern: if you shoot into some specular lights, you get a vertical line up and down the entire photo for each light.

If you use your point and shoot for snapshots, I'm not sure the LX3 is worth the big bucks. Leaving it on automatic and JPEGs doesn't seem to me to be worth $500. If you want to make photographs instead of taking snaps, I think this camera is worth comparing with others of its ilk (the Canon G9, for example [or better, the G11 when it comes out]). The LX3 does not make photos equal in quality to DSLRs, but it's much more carriable - and having it on hand when you want to make a photograph means you actually get the photo. For me, the value in the camera lies in having all the choices I get to make in 35mm photography (and DSLR) without having to lug the big iron around all day. It won't replace my D-70 anymore than my other P&S cameras did, but it's a very worthy adjunct. I would have preferred a much smaller camera, but I'm willing to compromise on the size to get the capabilities of the LX3.

There is already a lot of info out there on this camera, so I'll just quickly highlight a few things, mostly from the perspective of someone who normally shoots with DSLRs.

- Unlimited control - You can control just about anything on this camera, and a surprising amount of it very quickly through the "quick menu" accessed through the joystick.

- Wonderful wide angle lens - The 24mm equivalent field of view at the wide end is wonderful for landscapes, street photography and tight quarters. The fast F/2.0 max aperture and IS make the camera an awesome low light performer. I have a Fuji F30, long considered the king of compact low light cameras, and in reality the LX3 is able to get far more low light shots than the F30.

- Excellent user interface - Coming from almost exclusively using Canon cameras I was concerned about another user interface to deal with. I love the LX3 interface, it is so intuitive and transparent that I'm amazed that I often can get settings the way I want faster than with my SLRs.

- Excellent RAW shooting - The camera has a fairly decent RAW buffer (about three shots) and doesn't slow down at all in RAW shooting. Remember, it is still a compact camera and thus shot to shot time is longer than an SLR, but the point here is that the speed is the same regardless of whether you are shooting RAW or JPEG. Most of the few compacts that shoot RAW suddenly become glacially slow if you actually try to use the RAW mode - not the LX3.

Those are probably the four things that made me fall in love with this camera. Be advised of course that it isn't the perfect camera for everyone. If you tend to shoot in auto all the time (and the LX3 does have an excellent auto mode) you really won't be using a great part of the LX3's advantages. If you aren't comfortable working with the relatively restricted 2.5x zoom range you might also be frustrated and would probably be happier with cameras that have longer zoom ranges either by being larger (Canon G10, Panasonic FZ28) or by making a few more compromises in the lens design (Panasonic TZ5).

This camera really is a "photographers" camera that gives you not only complete creative control, but most importantly easy and transparent control through its wonderful user interface.

Even the variable aspect ratio setting, which I thought was sort of gimmicky when I read about it, has proven to be a feature I use almost continuously. The LX3's novel implementation of this (the different aspects preserve the diagonal angle of view rather than just cropping down one of the other aspect settings) is wonderful.

The size is wonderful, it is truly pocketable unlike the Canon G10 (of course the G10 has other benefits).

Being a wide angle junky I actually did purchase the wide angle adapter lens for this camera. Wow, wow, wow. I always thought these accessory type lenses were a silly idea, but this one gives an 18mm equivalent field of view and the optical performance is stunning for such a wide angle lens. My Canon XTi and 10-22mm no longer need to be hauled around for ultra-wide shots.

Finally, to repeat a point made by many, this is NOT a DSLR replacement. It can't do everything a DSLR can. It does have way more manual control than almost any other compact, it can shoot RAW much faster than most compacts, and its imager size and pixel density are better than the vast majority of compacts. That said, it doesn't offer the fast autofocus of an SLR, the deep RAW buffers and fast frame rates of an SLR, nor high ISO performance anything like an SLR. But it is a camera that performs admirably in many of those departments and most importantly it does a great job of getting out of the photographers way just like a SLR. I have now taken the LX3 on two dedicated landscape shooting trips instead of my SLR, so for some tasks is can be a replacement and for others a complement. Don't expect miracles, but do expect to be pleasantly surprised if you've shot with other compacts.

As long as you are aware of the restrictions of the 24-60mm focal range you just simply can not get a better compact camera.

This camera was a delightful surprise. It is small and easy to use, yet takes beautiful pictures. I am especially pleased with:

1) Uncanny flash performance - the flash looks like a joke, it is so tiny, but it really does the job. Closeups without being washed out, surprising distance range as well.

2) Battery life - also uncanny. You can shoot hundreds and hundreds of shots without depleating the battery. Fringe benefit of buying a camera from a leader in battery technology. (I bought spares but don't expect to ever need them).

3) Gorgeous LCD - best in the business, viewable in any light.

4) Virtual film types - there are several effects to choose from. My results have been startling - especially the dynamic B&W and Vivid Color settings.

5) Quick Menu - a tiny joystick gives instant access to many popular settings. Very cool and uncomplicated.

6) Multiple Exposure - you can use this for impressive artistic results.

7) Fit and finish are like fine jewelry, it's a pleasure to hold and to use

Other reviews have hit the basics, but these are a few of my favorites that may not be obvious from the other reviews.

Kudos to Panasonic for making such a ground-breaking product even when the competition is so good.

Panasonic DMC-LX3S 10.1MP Digital Camera with 2.5x Wide Angle MEGA Optical Image Stabilized Zoom (Silver)

I'm mainly a film user. For digital, I use a Nikon D200 and this Panasonic DMC-LX3. I just went on a vacation to Zion National Park last month and just brought my Leica and Panasonic with me. The bulky Nikon was left at home. The Panasonic, with its f2.0 lens, gives excellent quality pictures, usable up to ISO400. That's equivalent to an ISO800 speed for a comparable camera with f2.8 lens. The camera does occasionally show purple streaks on the LCD preview when I focus under a bright back light condition, but the streaks don't show up in the picture. Not a big deal and tolerable to me. Hope Panasonic will have a firmware fix. Otherwise, it's a gem.

UPDATE: More than a year later, the camera still works like new, no problem, no surprises. I played with the video option. The image quality, although at 720P, is definitely not as good as a dedicated HD camcorder, like the Canon HF11, but it's acceptable.

Panasonic has just released new firmware v1.1 on 12/15/2008, which adds these improvements to the great LX3:
1. Compatibility update for the DMW-FL220 flash unit.
2. Improved auto white balance performance.
3. Improved auto focus performance.

I love the LX3. When I go on vacation, I take the LX3 along with the TZ5, and I'm all set. In good lighting, the LX3 takes pictures that can compare to a DSLR. They're stunning. Even in low light, the pictures are still excellent. This camera is perfect for the person that wants a somewhat compact camera that has manual controls, and takes much better pictures than any point and shoot.

Update 1/15/09:
Panasonic released a new update today:

Improvements
Date/Version
1/15/2009 Ver 1.2

1. Improved white balance flash mode setting when DMW-FL220 is connected.
2. Proper setting of shutter speed on iA mode and Scene mode when OIS is turned ON.
3. Proper Exif information in the JPEG picture file.

I've owned a lot of digicams including a Canon 20d with a slew of "L" lenses. The DMC-LX3 is the best of the bunch. I've had it for over a month bringing it on a recent trip to Sydney as a backup to my dslr setup. After the first day I left the dslr in the hotel room and spent the remaining week with the Panasonic. This is not a point and shoot and allows me to be as creative as I want to be (I can finally get a nice bokeh with a compact!). However, unlike the 20d where I can get clean shots up to ISO 1600 the noise is definitely noticeable above 100 with the LX3. Save for that I have no other complaints.

So everyone knows DSLR's are fantastic these days, and the images you can get with these (provided you use expensive glass) can be downright amazing, but what if you just want a really usable (and I mean usable) camera you can bring with you wherever you go?

This is that camera. There IS a catch. You have to get decent at RAW editing to get anywhere near the results you can get out of this camera. Yeah, the dynamic B&W mode is pretty good, and I've shot low light jpgs at shows (no flash), but to get real results from the camera, you're going to have to get your hands a little dirty. The results I can get from this in RAW are just simply amazing for a camera this small. Yes, amazing. I don't throw that word around; but the color depth and sheer detail you can get in 5 minutes worth of work will just make you all smiles.

What I don't like about the camera: Not much, but there are a couple of things I could point at that might make it a bit more usable.
1.) It doesn't have much of a zoom. Ok, lame complaint, because I actually do understand somewhat that the laws of physics dictate how much of a zoom range you can have on a lens of a given size, without having image quality suffer. This is silly; if you need a zoom camera, this isn't what you should be looking at.
2.) No viewfinder, save an aftermarket one. Ok; this actually bothers me sometimes. In bright sunlight, or very low light, a cheesy optical viewfinder would be helpful. Yes, it would also make the camera larger too.
3.) The onboard flash sucks. It's cool that you can throttle it down, but if it could tilt up to be a bounce flash, it would be really, really useful. As it is, it always seems to be either too bright, and washes everything out, or too dark. It's a good thing this camera has good ISO performance at 400, and acceptable at 800; with the f2.0 aperture, it can take pictures in VERY low light, and still look great. Oh, and the hotshoe mount will accept a full sized flash :)
4.) Lack of a focus ring. Of course, without a decent viewfinder, that wouldn't be of much use, and we're moving away from what the camera is, so I understand the lack. The manual focus on the camera is quite decent, I should mention.
4.) That's it. Nothing else not to like about the camera. If you need a zoom lens, or the lack of a viewfinder is a deal breaker for you, go with the larger Canon G10/G11. The DMC-LX3 works better for my needs, being a 24mm f2.0 lens, and having unbelievable RAW data to work with.

What I do like about the camera
1.) It's small; purpose built. You won't draw crowds using this camera. It's almost friendly. It looks quite nice too. I can stroll through the city, taking pictures of folks, and they just don't seem to mind as much as when I'm doing the same with a DSLR. So for low key urban photography, this is actually BETTER than a DSLR (what, a compact camera does something better than an DSLR?).
2.) Fantastic lens. Can't say enough about it, for the price point, and camera size, it's awesome. Really wide angle, if you like landscape or urban photography, it's the perfect focal range.
3.) Best low light compact camera on the market, period. Yep, I'll stand by that. It SMOKES the G10/G11 in low light; I love going to see local bands in small clubs; these venues aren't very well lit, but you can get right by the stage. This thing takes fantastic pictures in low light. I don't care what the reviews say either about ISO 400 or ISO 800; check the images out in RAW, and then say ISO 800 isn't usable. Speaking of which;
4.) ISO performance. ISO 800 is a little bit grainy; but the best thing is, that it is a usable grain, not some watercolor chromatic that just ruins everything. I say ISO 800 is just fine for color photographs; it can even make gritty B&W images look better (cleaner is NOT always better)
5.) Ridiculous RAW performance; the camera is fast and responsive, even when shooting full sized JPEG and RAW. Never seems to really bog, and when it does; it still will buffer what your doing. Really amazing for a camera this size, and it makes RAW the only image format I even think about using. The amount of detail; color, edge retention, contrast; try this camera out with Adobe Lightroom, and you'll see what I mean, and you'll have a blast to boot.
6.) Multiple image formats; at first, reading it on paper, I thought it was just a gimmic; 4:3,3:2, & 16:9 formats didn't seem like they'd be that useful. But I was completely wrong, and that is the most used switch on my camera; it actually does change the way you'll compose photographs; what was one photo at 16:9 is completely different @ 4:3 or 3:2, landscape vs portrait, etc. Another fun feature : )

So, obviously, I like the camera; I've owned it for almost a year now. Best small camera ever made, IMO; this will probably be the benchmark classic folks talk about for years. Yes, I'm quite serious about that, I don't believe these days digital cameras are outdated every 6 months; this one will be quite current for years. If you need a low light, low key, wide angle camera with awesome RAW performance, just pull the trigger. 2 thing's I'd get while buying; a fast 8GB or higher card, and an extra battery (the generic one they sell here is just fine), and you're good to go.