I'm in a similar situation myself. My existing camera is a 35mm Canon SLR and I reckon it's about time to move from film to digital. I've also looked at the Exilim S700, but want something with more versatile optics. I'll probably go with another canon, the Powershot S3 IS, evnt though it has a 6mp rather than 10mp sensor. Like yourself, I want something that can take movies with audio as well as stills, that is compact enough to lug around most of the time. And is good for close ups. And has interchangeable lenses. And wont break the bank. And.... well, I guess you get the picture [img]/images/graemlins/wink.gif[/img]
Yup, it's a close call between the Panasonic and the Canon for me. The Panasonic gives better pictures, but the Canon is a bit smaller for lugging around on hikes. I read the following reviews for comparisons.
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I'm also in the market for a Canon. I have an S50 but am wanting to get to filmless and crispness replacement for my Canon 35mm EOS.
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I reckon to get the same quality as this you're into big bucks for a decent digital SLR. My current camera is also an EOS, and I intend to keep it for special occasions. The Powershot S3 is primarily a good compromise for me.