(Kraelin and I were debating cameras in another thread
, I thought this would be a better section for the discussion)
The Panasonic FX35 has only a 4x optical zoom (there is extra digital but I'd never use it). I played with SIL's (DMC TZ4) panasonic with the 10x zoom at Christmas and it was pretty cool. I don't think you can attach more lens to hers.
The upside is that the Lumix is the size of a deck of cards the downside is there is no manual mode. The preset scene modes are awesome for somebody like me. As I learn the SLR, first I shoot with the little Lumix and look at the readings to give me an idea of where to start with the Canon.
The short list for my next point and shoot will include Fuji Finepix - because I've seen awesome pictures on Flickr shot with it and Nikon (because of what they say about very little noise in low light). My next point and shoot will probably be able to shoot RAW.
Not all my pictures were made with the Lumix, I only got it March '08. Sometimes I shoot with DH's Canon 40D.