From the physical changes made to the G3 in comparison to the G2, it's obvious that instead of a slimmed down GH2, the G3 is more like a beefed-up GF3. Whereas the G2 was friendly to the advanced beginner with more dedicated physical controls, the G3 is friendlier to the beginner, with less physical controls and a smaller, lighter body.
The G3 is a pleasure to use. Ease of use has been improved with the new iA+ mode, which now gives you manual exposure control in automatic mode. Not every camera manufacturer seems to pay enough attention to ease of use, and we applaud Panasonic for making it a key focal point in their camera designs.
The G3 also takes Micro Four Thirds' image quality to a whole new level. Not only are images looking clean and detailed, they retain low noise levels up to ISO1600, with ISO3200 significantly better than it was before (even better than on the GH2!).
Certain things could have been improved; the camera tends to lock up if you shoot multiple RAW files while it's writing to file (its specifications state it can shoot up to 7 RAW files in one go), and because it lacks an eye sensor there's no automatic switching between the LCD and viewfinder when you put your eye up to the EVF.
Also, be prepared to pack an extra battery or charger if you're going away on a trip with the G3. We took it out for a day and a half for occasional shooting and it dropped to a single bar by the end of the trip. The battery life is rated for 250-270 shots, low when compared with the G2 (340-390 shots), the GH2 (320-340 shots) and even the GF3 (320-340 shots). For us, this was the most disappointing aspect of using the G3.
The G3 occupies an interesting place in the G-series family. With its simplification, its target market becomes more obvious, encroaching less on GH territory and more on GF ground. It has become more like the G10, which was an early model even more entry-level than the G1, but for which there was no eventual successor. It seems that the G3 has become the G10's spiritual, if not numeric, successor.
If you used to be a fan of the GF series before it became increasingly simpler with the GF3, you can think of the G3 as an improved GF1 with a viewfinder. It is also a more affordable alternative to the GH2, smaller, with better image quality but less video capabilities (there's no audio jack for an external microphone, for example) and less physical controls. (For comparison's sake, the G3 body alone costs S$899, S$1099 with the 14-42mm kit lens and S$1499 with two kit lenses; the 14-42mm & 45-200mm. The GH2 costs S$1599 with the 14-42mm kit lens, $2399 with the 14-140mm kit lens.)
The G3 will especially be interesting to DSLR users looking for a smaller camera, but still crave using a viewfinder to shoot instead of an LCD. Just remember to charge regularly or pack an extra battery.