I had the same questions when my wife's older canon P&S broke.
Canon was not yet to marked with the M and I got the Pana GF3. Here's why and thus why I recommend it
1) Bigger sensor with its advantages
2) Small enough to fit in her handbag. This was a BIG must and the retractable zoom makes it possible. I really think Canon missed the boat not making there zoom retractable. The zoom range is perfect for her application being that of an all around daytime snapper
3) Built in flash. None of these packaged flashes are strong, thus not having a fidly one you can lose was important
4) 20mm f1.7 - did not know that beforehand, but what a lens. I bought it for those night time out and abouts where you just look like an idiot with a DSLR, but now it hardly leaves the camera
So I recommend the m4/3 as in my opinion its the only system that delivers as a package. Small, flexible, quality, choice, price. Maybe not the best in a single category but as a whole pretty damn good.