Are you really suggesting that a GH2 is better than my 1DS3 with 200 f/2? ... then probably there is no point in any further discussion...
From flexibility/portability perspective a GH2 + a bunch of micro 4/3 lens (which still cost less, weighs less and takes less space in your bag) are way better than an 1Ds3 with 200 f/2.
So yes in 99.9999% of the cases yes micro 4/3 with a bunch of lens is better (for stills E-M5, for video GH2 or G5). For the remaining 0.0001% 1Ds3+ 200 f/2 wins big time (when you need extreme low light performance, background blurring etc.).
All I wanted to say that entry level DSLRs (no matter if crop or FF) with kit lens is a very heavy and space taking way for non pro usage. In most of the cases it's also a costly way. Far too many people have the misconception that for vacations, daily snapshots they need a DSLR and couple of expensive lens. In fact most would be better served with something smaller, lighter and most of the time less expensive.
Real pro usage is different. However that's probably not the target for an entry level crop or FF DSLR with crippled ergonomics and functionality.
If you are after something portable and cheap then clearly a P&S would be better than a 4/3 using your argument
However, weight and money are not everybody's priority. You might think that on vacation smaller, lighter and less expensive is 'better' but I dont want to come back with 'snaps'. I am going on vacation to France on Saturday and will be going round the chateaux and castles as well as some birding( my wife's hobby).
I will have the 1DS3 and 1DS2 plus 40mm, 24-105, 70-200, 70-300, 17-40 and tse24, probably the 600, plus of course a couple of 580s and stands. On holiday one has the time and opportunity to get good pictures so a 4/3 would be a waste of time and effort.
The large whites are about high IQ as much as low light (I use flash anyway) and bg blurring.
There is no point of arguing. I believe that both of you are right. It depends on what someone wants more.
FF with many lenses mean the best possible photos.
Micro 4/3rds mean traveling light, worrying less and ... having the camera always with you!
I, for example, am a 5DII owner. Also, I do have many lenses (except of the big whites lucky brian
). I wouldn't go on vacation without some of my equipment especially in places I know I will have plenty of opportunities to take pictures.
However I always get tired of carrying it! I guess it's the price to pay for my preferences. So I can understand that someone can have fun with a tiny 4/3rds camera.
I will not buy one though because I do not wish to invest on a second system and I always think that the money for a 4/3rds system could go to a new lens