And then there's that lens. Image stabilized, 24mm at the wide end of things and offering an F2.0-2.8 maximum aperture range that gives you the choice of shooting at lower ISOs than its competitors. It's a feature that really sets the LX3 apart, even amongst cameras aimed at keen photographers and, as DSLRs become less expensive, that's exactly what this camera needed. The only concern must be that the lens only extends as far as 60mm equivalent. This is pretty short by most measures and may limit the cameras appeal, depending on your shooting needs (it's great as a walkaround landscape camera for instance).
Beyond all the good intentions of the specifications, it's a camera that appears to directly address many of its predecessor's shortcomings. Noise performance is greatly improved and the level of noise reduction is much less destructive (and you can shoot in RAW if you're the kind of person who has a prefered noise-reduction method in post-processing).
The joystick is a nice idea that should make for an excellent user-interface but it's a bit fiddly. The user experience just isn't quite a slick as it could be if you want to regularly change settings. Panasonic's own G1 shows that it's possible to give a superior level of manual control using a similar number of external controls (perhaps we should start asking for a control dial like the G1 if there's ever an LX4). That said, you do get used to the LX3 and it isn't completely fair to compare it to a camera aimed at a different set of users - it's still arguably more pleasant to use than any of its obvious competitors.
White balance isn't the LX3's strongest point but there's a good degree of control if you're consistently finding that it's not giving the results you want (Or, again, you can shoot in RAW and process in the software that is supplied with the camera). And in most other respects the images are very good - automatic correction of chromatic aberration and sensible (if rather saturated) image processing mean a lot of time spent with the LX3 is time spent thinking - 'Oh, I'm quite pleased with that.' And that's the bottom line - it's a camera that encourages you to play, to experiment, to take photographs and one that rewards you for doing so.
Highly Recommended