I certainly see a difference in file between E-P1 and K20d, but it isn't night and day and to be honest sometimes I like the image the E-P1 gives me better. The AF performance does give me pause when I compare it with other cameras, but generally does what is asked of it. And it still elicits a different reaction on the street than a dSLR.
Plus as my g/f says, the E-P1 is a beautiful camera. She hates the way her G1 looks, but likes using it. Aesthetic varies with the individual and certainly isn't *the* factor in a tool, but it is a consideration.