Olympus e-pl1 vs similarly priced compact

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Andy
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I can get the Olympus with the kit lens for 270 which seems a great deal. I would like to get a pancake lens for it really as I want it to be compact but good quality. I'm wanting to know if there's any opinions regarding if I could get as good iq with a similarly priced compact. It's really to tale with me when my dslr is impractical and I don't need telephoto really as it will ne for things like street photography and candid etc.
 
I used to have a LX2 and now have a LX5. I think that these were / are pretty much the top of the tree for compacts and if there's any better it wont be by a huge amount. Even so I don't think that these compare with my G1 or GF1 even in the best light. For me the colour response and general look of MFT is much better even before you start to pixel peep so I'd be very surprised if you could get MFT rivalling IQ from a similar priced compact.
 
No matter how much you spend on a compact it'll still have a tiny overcrowded sensor and compromised lens.
 
I got one and the jpegs out of the camera are superb, I would say equal to an entry level DSLR, I use it with the panasonicc 20mm pancake and the VF2 viewfinder.
 
I have an E-PL1 + 20mm f1.7 and I love it, to the extent my D700 stays at home most of the time now and I'm in the process of moving it on. I bought the electronic viewfinder for it as well and use my old M42 and Minolta Rokkor lenses with too. It's a really nice little camera that produces DSLR quality images in decent light. I don't think a compact could could compare.
 
I am right on thinking that the conversion factor is 2 times aren't I? I don't know whether the 14mm might be better. Or is there a 17 too. Still not sure but will definitely get the camera.
 
Conversion factor is indeed x2, I've ordered the 17mm with my EP1 but from what I've read its not meant to be great, but it was an extra £99 with the camera and seems to sell very well on Ebay if I don't like it.

I'm keen to add the 14mm to my collection but I think I'll start with the Panasonic 20mm its meant to be outstanding.
 
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