When we awarded the Panasonic Lumix DMC-GF1 an Editors' Choice about a year ago, it was mostly because it fulfilled three of the four reasons I think the category exists: an interchangeable-lens camera (ILC), it provided a consumer-friendly compact size, faster than point-and-shoot performance, and the image-quality benefits of a large-ish Micro Four Thirds sensor.
Now there's a lot more competition: Olympus' PEN series is still around (but with sluggish performance), and Sony has come out with its sleekly designed and solidly performing NEX models. The biggest problem with a lot of these models, however, is price: They command the prices of entry-level dSLRs but don't deliver on the performance. The cheaper ILCs simply aren't compact enough. So I have to admit, I expected a little more with Panasonic's announcement of its GF1 update, the Lumix DMC-GF2. Though the sensor is the same resolution as before, it's the same newer version that's in the Lumix DMC-LX5.
Discussion of size is important in this market space, because in addition to image quality, this is where the battle lines are drawn. These cameras are designed to deliver the best image quality in the smallest volume. Technically, the Lumix GF2 is similar to its predecessor, with the same 12.1-megapixel sensor, but Panasonic says its Venus Engine FHD processor will improve noise performance across the ISO range, which is important when going up against APS-C sensors. What they've achieved in this important area will have to wait until we receive a production version, as all we've seen is a working prototype.
Size isn't the only component to the story, what's also interesting is what they had to do to achieve this size reduction, which includes moving many of the features that previously had a dial to the new touchscreen. Many of the G2's touchscreen features have been brought to the GF2, and many new ones were created to replace features like the Mode dial. At the same time, Panasonic added higher resolution video to the GF2, up to 1,920 x 1,080 at 60i in AVCHD compression.
