The Panasonic Lumix ZS5 a.k.a TZ8 is purportedly a point-and-shoot camera. However, if the auto setting is all you will ever use it on, you'll probably be disappointed by its performance. This is not a camera which you can simply set on auto, aim, click the button and expect the pictures to come out excellent all the time.
My experience with the intelligent auto has been hit or miss so far. To be blunt, the 'intelligent auto' does not seem exceedingly intelligent at all, and it loves bumping up the ISO (grainy pictures) and pulling out the flash in circumstances where using the said flash doesn't seem to make much sense (wasting battery and resulting in ugly photos). To be fair, it performs excellently when taking pictures in bright outdoor conditions, but if you plan to take pictures indoor and it is the slightest bit dim, the auto doesn't seem to do too well and I ended up with a lot of blurry photos that way. Even with the flash deployed.
After spending about a couple of hours taking a bit of time to understand the manual modes and the appropriate settings of each, however, the mediocre point-and-shoot camera became an excellent little camera. The manual modes allow you a lot more leeway on how you want the photo taken, and thus override the choices the irritating auto mode makes, thus saving your indoor photos. You can also do a lot of experimental pictures. (In fact at the smallest aperture setting, the camera allows you to keep the shutter open for a staggering 60 seconds!). So if you know at least a little bit of basic photography and are willing to do your own settings, the camera manages to perform to its full potential and you can get some truly excellent photos.
If you're not too keen on reading up on fstops and shutter speeds and whatnot, I should mention the camera does get along quite respectably on its preset scenery modes. There's a pretty nice selection of them, covering outdoors, night scenes, food shots, macro etc. An important thing about getting good shots while using these modes is to give the IA a lot of time to "make up its mind" how it wants to take the photo by halfway depressing the button before you take a photo. Do watch for the indicator on the LCD to turn green before committing the shot. There's also a high-speed burst option, which scales down your pictures to about 4 megapixels but allows to you take a lot of pictures in succession very very quickly. (Note: You can also shortcut to this mode under the MS setting on the mode dial)
As you all know, the huge Leica lens on this camera is the main attraction and it lives up to its hype. It's advertised as 16x zoom, but only 12x of it is optical, the rest of it done by "intelligent zoom", which is basically a surprisingly almost-indistinguishable-from-optical digital zoom. The zoom also works (limited however) in macro zoom mode, which can result in some amazing macro shots. The camera also has conventional digital zoom (which went up to a staggering 90+ times zoom) , but you have to navigate the camera's controls to turn it on because by default it's turned off. The non-intelligent digital zoom however, does produce grainy pictures, but this is expected of digital zoom anyway.
When you have a strong zoom, the image stabilization capabilities of a camera become extremely important, and the ZS5 seems to have that covered. I did some testing shooting out of a moving car, sometimes with maximum optical zoom and the camera managed to deliver surprisingly clear pictures despite that.
I actually liked the slightly larger size of the camera, since it made it far easier to hold, but the thing that tipped the balance in this camera's favour for me were the controls, which shy away from pressing buttons as much as possible (Sorry Canon, but you lost out to the Lumix in the end because of this). Dials and switches are less prone to accidental pressings, and a nice little feature is that the camera will still recognize situations where the power switch has been left on by accident and will shut itself down to save the battery.
The battery life is ok, but not particularly amazing. I would recommend getting a spare battery to keep on hand. Do keep in mind however the battery is a proprietary Panasonic one, and the firmware on the camera will recognize imitation batteries and refuse to use them.
The HD video is very nice, although the sound recording is only in mono. The upshot of this camera is that the zoom can be used with the video, and I was very pleased with that because it really does make a lot of difference when you're taking videos of something far away so that you can actually see the thing instead of it being a black silhouette. It does not use the same recording format as the other cameras in the ZS3 or ZS5 however, so if I am not mistaken, the video recordings will take up more space on your SD card.
Overall, I am quite happy with this camera, but like I said before, this camera doesn't do too well as a simple point-and-shoot for the casual user. It takes a while to learn to use to get the best out of it. I would however, recommend this camera for people with a casual interest in photography, and aren't afraid to experiment with their own settings. I would also recommend this camera to people who are into photography but want a compact camera with an excellent zoom without having to lug around a DSLR and lens bag.
Pricewise, I think it's quite reasonable, and I don't think you can get another superzoom camera from any other camera maker for this price range. Although if you find a ZS3 (the older higher end model of this same series) for about the same price, you won't lose out by getting the ZS3 either.
UPDATE 29 Oct 2011: After a little over a year's use, the genuine Panasonic battery that came with the camera decided to suddenly and completely stop working. As I have mentioned before, replacements are not cheap and 3rd party batteries may be blocked by the camera's firmware, so this is definitely something you may want to consider before making any purchases. Still enjoying the camera, the battery factor could be a bit better...