These are my impressions combined with some commonly restated "issues" potential owners should be aware of.
Regarding the D-Lux 4, I really do like it a lot. If you can find a LX3 at standard retail prices ($400 give or take) I would go that route. Last I saw though they were going for just as much (or more in some cases @ $800) as the D-Lux 4 on eBay and Amazon when you balance out the features v. what's included.
- IMO it's the best all around "serious compact" though it's not super compact with the lens protruding (only the DP1 equals or bests it in terms of IQ but then you have a fixed focal length which isn't a problem at times or for some.)
- it works nicely on the belt loop with the leather case or in a purse I would suppose for females.
- fast compact lens (f2-2.8)
- excellent color (up to iso800) and b&w (up to iso1600 with good light) potential (I only shoot RAW)
- 3 yr warranty and Capture One 4 software for those without any image developers (I still use LR2.3 personally as it's just more intuitive to me to do quick PP work.)
- D-Lux 4 has a much better looking body IMO than LX-3 (doesn't affect the image quality though obviously.)
- Some say (mostly Leica nuts, Leica dealers, people unconvinced anything good could actually come from Panasonic, and/or people trying to justify the purchase to themselves) Leica reworked the color profiles to be improved which I still believe to be complete BS to charge more for essentially the same camera. The only real differences I see in the images are file extensions and a "M8 like" menu system.
- Price (a $700 compact is hard for some people to swallow and admittedly I was waiting on m4/3 news from Olympus before I went on and bought a G1 which I plan to add now I'm thinking for a "compact photo total solution.")
- Lens zoom range is 35mm equivalent of 24-60mm (great for landscape, architecture, and family/social outings where telephoto ability isn't needed.)
- Don't know if this is pro or con but related to the previous... there's a "trick" to extend the optical zoom range to 4.5x (108mm equivalent) but it limits image size to 3MP... Check the manual for this.
- limited in the PP options currently with the lens correction that has to be done. Adobe products seem to be the best bet all around if you aren't into C1. Aperture isn't a RAW option yet unfortunately.
- limited high ISO capability (but that's true of most none FF dSLR.)
- no ISO dial (almost everything has to be adjusted in a menu system)
- the joystick is imprecise at best to select options (this is coming from someone who grew up in the "Nintendo" generation so take that how you will.)
- Ergonomics (that's a personal thing - fine for some but not so much for others. I get along fine though with large hands and am 6'4")
Like many have said before - the D-Lux 4/LX-3 is a "photographers tool" and it will serve you well as long as you put it in the best case scenarios to use it's strengths and limit its weaknesses. I like it a lot and I find myself wanting to actually go out and shoot more with it than I did lately with my Canon 300D system. I don't know if it's newness or if it's the fact I actually have it with me more often. I hope this helps a lot. That said I probably listed more cons than pros but many are subjective to the user and may not apply to everyone. I really do like this camera a whole lot personally.