Micro 4/3 is what I am looking into as well, as an upgrade to my trusty G9. Panasonic has two new cameras GF1 and GH1. GH1 is basically G1 with video capabilities. But GF1 is not out yet and GH1 is very hard to find...
Here's my post about this from another thread:
Riding a bike and wanting to take great shots create a bit of a dilemma because real great shots only come from DSLRs with good lens (not basic or kit lens), good flash (not the onboard flash), tripod and maybe even reflective screens. So, what a guy to do? Compromise!
There are a couple of ways to compromise. These days there are a few small DSLRs being offered by most camera brands and if you don't put too big of a lens on it, it would be possible to carry the camera and just use the onboard flash. Of course a normal tripod is out of question.
compromise number 2, if you really don't have enough room on the bike (tank or tail bag) or don't use a backpack, is to carry the best digicams or compact cameras on the market and then use Photoshop to enhance your images. That's what I do. So I use a compact.
However a 3rd compromise is hitting the markets now. There is a new line of cameras called Micro 4/3s, which use large sensors, jammed into compact bodies, using smaller lenses. It's right now the best solution for guys who want great image outputs from smallest packages, however, this product line is very very new and is just beginning to show its potential.
A couple of things about today's digital market. Canon and Nikon are the leaders in the DSLR market. However, in compact market Nikon is a non-player. In the compact market the top players are Canon and Panasonic with their Lumix line. Leica compacts are just a rebadged Panasonic, so stay away from Leicas all together.
I use a Canon G9, which has been updated twice, and G11 just came out. But the G9 with 12MP, shoots basically the best quality images for a compact period. The G10 does the same and we think the G11 will not fail either.
This is how I carry my G9 in a backpack. If no backpack, then I just use a small camera case. This G9 with no case fits inside a Jeans pocket, although bulky!
So, the top 2 compact cameras on the market are Canon G series and Panasonic LX series. Both are priced at around 500. But well worth it.
The Micro 4/3, is what I'm looking at now, because I am exceeding the max potential of the G9 and G10 or G11 will not do much better because they are still using the same tiny 1/1.7 sensor, which is just 7.6 mm wide. Talk about tiny. The basic DSLRs use sensors about 23mm wide. Big difference. Micro 4/3 sensors are 18mm wide. Also very large compare to the Canon G series. Keep in mind, basic compacts use sensors that are only 6.16mm wide.
So, that's the quick overview. I use the best compact on the market, but I use Photoshop extensively to enhance the images. Hopefully if I do get a Micro 4/3 camera then the images will look even sharper, detail rich with much better contrast.
One Micro 4/3 that supposed to be out soon, is Panasonic GF1. I am planning to take a real good look at this camera. It's basically the same size as my G9, just a tiny bit larger. However, since the lens doesn't retract, it will no longer fit in jeans pocket, but that would be an OK compromise.