I have the Olympus e-420 w/25mm pancake lens and enjoy a DSLR in such a small size/combo.
I don't see any advantage to the G1...as I understand it, it is not any smaller then the e-420 and still has a smaller sized sensor.
Though I tend to agree with your E-420 vs G10 comparison in another thread, I think you are way off on this one: the E-420 and G1 each have significant advantages over the others, that are compelling for users with different priorities.
The G1 offers:
- the same sensor size as the E-420, but with the expected improvements from a year or two of tchnological progress.
- IS, though only through a few Panasonic OIS lenses rather than my preferred in-body approach.
- an EVF with a far larger image size than the E-420's optical VF, and with 100% coverage. (Better in these respects than any APS-C DSLR's VF too.)
- a large, articulated LCD, widely held to be a big advantage when using LCD LiveView.
- far less shutter lag than the E-420 in LiveView mode, though probably not as good as the E-420 when using its optical VF and phase detection AF.
In many ways (sensor, articulated LCD, VF image quality, IS availability), the Panasonic G1 is in fact closer to the forthcoming Olympus E-30 while being significantly smaller, lighter and cheaper. I would prefer the E-30 though for its ability to stabilize all 4/3 lenses including the two I already own, and its fast 11 point phase detection AF.