I traded in my Panasonic GF2 (which I loved) for the G3.
The problem with most small compact M4/3 systems is that they don't have a viewfinder. Its a catch 22 because the M4/3 mirror-less standard was designed to reduce the camera package size, yet the addition of a viewfinder now makes the camera larger. However, as I quickly learned, a viewfinder is critical for bright outdoor photography. I haven't seen a LCD screen on a camera yet that works great in bright sun. A viewfinder is better.
When the G3 was released I was pleased to see that Panasonic focused on all the right things. Image quality, articulating screen, viewfinder, and simple effective controls. The final "icing on the cake" was the reduced camera size compared to previous models with built-in viewfinders. The G3 is not much bigger than the GF2, in fact it feels like the GF2 with a really good viewfinder attached to it. In fact it still fits in my GF2 camera bag, a bit snug but it fits. Bottom line is that the G3 is still way smaller than a large bulky DSLR.
I highly recommend upgrading to the G3 if you have a non-viewfinder M4/3 system.