I too have an LX1 as my pocket(able) camera, for times when I don't want to carry a DSLR. The noise is noticeable, but bearable. I love the size, ease of manual controls, and very fine lens, as well as the raw files. I don't love the lack of an optical viewfinder, but I've learned to live with that.
Some years ago, I had a Canon G3 as my first decent digital camera. It made very good pictures, and had decent manual controls (not as good as the LX1, though). It also got me into shooting raw -- I don't understand why Canon dropped the raw format from the G7...
But the main reason I went to the LX1 over a G7 or something similar is the size of the camera -- the G series are quite a bit bigger, and a small, nearly pocket-size camera was my main goal, in contrast to the DSLR. The LX1 is a nice compromise for that purpose.
It definitely performs better in good light, but I've used it indoors and in shadow, and it functions pretty well, considering the constraints of sensor size, etc. The flash is not pretty, but it's reasonably effective indoors, which is when I've needed it. I haven't noticed any shot-to-shot delay problems with flash, such as those described above with the G7.