DSLRs are great but they can be a pain in the ass to carry around even if you only use one universal zoom. I wanted a camera I could always have with me but would give me decent images as opposed to my mobile phone.
I fell in love with the LX3 as soon as I got my hands on it. It has that heavy, rugged feel of a classic rangefinder camera. Unfortunately without the rangefinder. If you hate squinting at a 2 inch display at arms length this is not the camera for you. You can buy an external rangefinder that fits into the flash shoe (which make the camera look even more retro cool) but it costs half as much as the camera itself. In fact all of the limited accessories are cheekily overpriced. And a lot of gear one might assume to be standard just doesn't exist, like a remote release cable or even an IR one for that matter. So what? You might think, who would need that for this kind of camera? The thing is this is a very capable camera and could be used for decent macro and landscape work and with automatic exposure bracketing you could use it for HDR work.
It's claimed that you can get close ups down to 1 cm but I found the macro features very idiosyncratic. The auto focusing is impossible unless you're shooting flat sheets of paper, manual focusing is done with a tiny joystick that takes some getting used to. At it's end position you can get very close, but as soon as you release the joystick the focus shifts and if you can't release the shutter while depressing the joystick. Nearly all settings can be set with a myriad of tiny buttons, sliders and the joystick. Unfortunately they shift very easily, so when you whip the camera out of your pocket you never know which settings have been changed. The lens, which is brilliant by the way, protrudes a bit from the body of the camera which means it will only fit in rather roomy pockets. It is protected by a plastic lens cap that can easily fall of in your jacket pocket with disastrous effects for the lens if you have other hard, sharp objects in your pocket.
The camera also does HD video with great results. Unfortunately there are downsides to this too. The files are saved in .mov format which is impossible to do justice unless you have a Mac. However, with Quicktime professional you can do basic editing and even import the film to an image sequence in several different formats.
This is sort of fun for street photography, just let the camera run and then extract still shots from the film. It can be time consuming if you're getting 29 frames a second but the result is pretty good if you leave everything on auto. Here is an example:
http://www.photoblog.com/yellodog/2009/01/06/
Under some artificial lighting conditions you get vertical purple stripes through the picture in video mode. Panasonic claims this is no fault but a attribute of ccds even though I've never seen that effect before and it can certainly give you a nasty surprise when watching you film.
All in all a great camera but a lot of frustrating negative points that prevent it from being perfect (or even close to perfect).