Metropolitan United Church -- Panasonic LX-2
Took the LX-2 with me yesterday and shot around the Queen & Church area. I really like the size of the camera, though I would like more if it's slightly larger. The lens on it has pretty good resolution. When processed through Lightroom 3 (which I couldn't resist the good deal that B&H had on sale for $69 about a week ago), the quality at ISO 100 is quite good. I am now shooting at the 16:9 aspect ratio to maximize the solution of the sensor, though I don't really like it for still pictures. To me, it's not as natural as 3:2.
In terms of image quality, there is really no comparison to APS-C or even M43 sensors. Even on base ISO 100, noise is visible and that DC look is staring you at the face at 100%. I believe in print, up to 13x19, quality will be just fine.
It's a matter of time, the low end small sensor DCs will be history in a few years, replaced by cell phones, and most new DCs will sport larger sensors with much better image quality. I do believe Nikon will have a upper hand on this, as the one inch sensor in the J1/V1 is perfect for digicams. It's such a great balance between image quality and size/cost. APS-C is a bit too large, as lenses that covers this size of sensor will have been be much bigger.