John,
It's funny. I just left a post on the Leica User forum talking about how spoiled we've become with our expectations at high ISO's these days. At one time we reveled in Tri-X and its graininess. Then when T-Max came out with its more uniform grain structure and promise of films at higher ISO's it was still grainier at ISO 400 than today's standards but we rejoiced nonetheless. And Kodak, after initially withdrawing Tri-X satisfied that a major achievement in film had been reached, had to bring it back because so many howled at the loss of 'character' that was displayed by the smoother, superior T-Max! And T-Max 3200, the first real breakthrough in high speed film was also a film riddled with boulders that made up the image, but because it was the only game in town folks were elated.
Between you, me and the wall, with this perspective I feel the G1 (and many digital cameras by the way) up to 1600 (and in many cases 3200 and beyond) is incredible by yesterday's standards. In black and white ISO 3200 in digital is still better than T-Max 3200 ever was. (And I don't think there was a color version beyond 1600 and all the Super Max stuff from 800 on up was grainy as hell!)
What people did in the past and what made Leica so legendary was the range of optics that were f2.0 or faster that helped compensate for films that were so grainy thus allowing better image making (at faster shutter speeds wide open) with the slower, smoother looking films.
These initial lenses for the G1 are, in my opinion, superb. They're sharp, contrasty and exhibit very little chromatic aberration from what I've seen (and read). And, with the option of being able to use faster extant optics of Leitz et. al until Panasonic and Olympus roll out faster lenses there's even more promise.
But your point is well taken. Look what you can do at ISO 800 and an f3.5+ lens. Amazing. Simply amazing.
Peter
Peter