The is latest in Panasonic’s Lumix DMC-GF 3line of compact interchangeable lens cameras, and the smallest camera of its type in the world (for now, at least). The design of the GF-series has changed over the years, though not necessarily for the better. The original GF1 had traditional rangefinder styling and plenty of switches and dials. Last year’s GF2 took away many of those dials and added a touchscreen to make up the difference.

The DMC-GF3 is a very different animal. First off, it’s tiny — almost 17% smaller than its predecessor, and 16% lighter. It bears more of a resemblance to one of Panasonic’s compact cameras than it does a rangefinder camera. It has even fewer buttons and dials, a weaker flash — and the hot shoe, stereo microphone, and accessory port from the G2 are all gone, as well. As a GF1 owner, I can’t help but be a little disappointed with the direction Panasonic has taken with the GF3, but apparently smaller is what people want these days.

The biggest changes on the GF3, besides the very noticeable drop in bulk, is the improvement in both autofocus and continuous performance.You have your choice of two lenses with the DMC-GF3. The less expensive option is to get the camera with the 14 – 42 mm lens, which has optical image stabilization built in. This lens has decent build quality (though the lens mount is plastic) and low corner blurring and purple fringing, though overall sharpness could be better. I first used the F2.5, 14 mm pancake lens with the DMC-GF2, and was not impressed. While this lens is compact (and has a metal mount), it suffers from noticeable corner blurring and vignetting.

As with all D-SLRs and interchangeable lens cameras, the DMC-GF3 does not have any built-in memory, nor does it come with a memory card. Thus, you’ll need to pick up an SD, SDHC, or SDXC memory card right away, unless you happen to have one already (as I figure most folks do). If you’ll be taking mostly stills, then a 4GB SDHC card is probably fine. For movie enthusiasts, you’ll want to get something like an 8GB or 16GB card instead. It’s definitely worth spending the extra dollars on a high speed card (Class 6 or higher)especially for movie recording.

Panasonic includes version 6.2 of their PhotoFunStudio HD Edition software with the Lumix DMC-GF3. This Windows-only software handles basic tasks fairly well, though the whole “wizard” system gets old quickly. On the main screen you’ll see the usual thumbnail view, and you can view photos in certain folders, or filter by things as specific as scene mode. The software can learn to recognize faces (much like the camera itself), which offers you another way to browse through your pictures. Other options on the main screen include slideshows, creating “short movies” (basically video slideshows), printing, e-mailing, or uploading to YouTube or Facebook. You can also copy photos and movies to SD cards or DVDs.

Above you can see the still photo editing screen. Here you can adjust things like brightness, contrast, color, and sharpness. Images can be changed to sepia, black and white, or “negative color”, and redeye can be removed with the click of your mouse. There’s also an auto enhancement feature, for those who want to keep things simple.

Movie editing features include the ability to trim unwanted footage from a clip, turn a video frame into a still image, or convert a video to MPEG-2 format.