Over the years I've found myself moving towards using smaller cameras instead of my DSLR - especially when travelling, As much as the dSLR maximizes image quality, it's a drag carrying around 5-10 lbs of camera and lenses, and the quality of smaller cameras like the Panasonic GF1 is getting closer and closer. (The big exception being shooting any kind of action.) The new Fujifilm X10, coming out next week, is another option - even smaller than the GF1, but with a large sensor for a compact and great styling. At $600, it's not ludicrously expensive either -- and the price will probably drop to $500 or less in a couple of months.
The early previews seem good - if the image quality is decent, this will be a new top pick as a pocketable option for digital photographers.