First of all, I would like to congratulate Michael for an informative comparison. The setting in which the G11 has to compete is completely diffeent from when the G10 appeared. Micro-four thirds cameras are clearly pushing the envelope in terms of the combination of "larger sensor/small camera" style of cameras.
However, I think there is still a place for cameras like the G11 (or Panasonic/Leica LX3/D-Lux 4, or the little Ricohs), if you want a travel camera with compact form factor, and do not have to use high ISO's. The advantage of the G11 is the flexibility of the zoom; once you attach a zoom lens to the Panasonic GF1, you end up with not so much a compact camera anymore.
In the end, there is no contention that cameras with larger sensors have better image quality; however, at lower ISO's, the difference is less notorious. I am happy there is a large choice for us photographers, it means we can pick the right tools for our endeavours.