I just bought the wife an LX5. She had a Canon S90 she hardly used at all (she's a Panasonic fangirl!).
I thought the S90 was a fantastic compact, and indeed it is, but the LX5.....
Expensive but worth every penny. Lovely camera, beautifully made, intuitive to use and above all the images are fantastic. Shame it still has the lens cap but hey, I'm used to a DSLR
I can't compare them to images from an LX3, but compared to her previous Lumix TZ5 they are a different league altogether. Even compared to the S90 the LX5 images
feel better, although I didn't use the S90 enough to do a proper comparison.
For me, with bigger hands, it nicer to hold than the S90 too. It goes to 24mm equiv at the wide and and has full manual control, with a DSLR style thumbwheel control.
Exposure seems spot on and images seem really punchy straight from camera. Great detail in the images too. It also has a faster lens at the long end than the S90 (90mm equiv) and seems to produce cleaner images at higher ISO. We love it, I only wish she'd let me play with it
Here's one of our test shots: as shot, cropped slightly and resized for TP:
