I have the Panasonic LX2 which is the same camera, less the $150 or so markup. I believe the D-Lux 3 has some Leica algorithms or something. I am really happy with it, but it's not without quirks.

*slow to write RAW files (it writes RAW + JPEG and you can't change that)
*small sensor=noise above ISO 200
*maxes out at f8.0
*white balance is kinda funky, but I shoot RAW
*usual blow outs of hilights
*blue sky often captured as cyan
*just a bit too big to fit in my pants pocket

All in all, $400 well spent, and many of my keepers from the past year especially for my photoblog were shot with it. I carry it with me always. I wish my dSLRs were 16:9.

I do not have one but I know Bryan F. Peterson used Dlux3 as a 'always with me' camera and loved it especially for macro shots.
I have a friend who casually shoots with MF digital back and uses Panasonic LX2 for snapshots. LX2 is practically the same camera with affordable pricetag. He loves the camera, but tells it is quite noisy. I saw his winter (a lot of snow and trees) vacation slideshow and it was obvious that camera handles difficult lighting very well.

Peteq, P&S cameras are limited to minimum aperture f8.0 or so by laws of physics. With smaller aperture images will be blurry because of the diffraction.

I love the D-Lux 3. But here are a few things to consider-

Write speeds when shooting RAW are really bad. You can get one frame off every four seconds.

The raw format files are 20MB each, so even a 2GB card fills up quick.

No optical viewfinder.

And finally, the big one- due to noise issues, you're limited to 100 ASA if you want quality images.

The best bang for the buck here would be a used Panasonic LX-1. A few less megapixels, but arguably better on noise, and half the price. That's the camera I had before "upgrading" to the Ricoh GR II. If you're seriously considering the Ricoh, popflash.com usually has demos for $598, and they're nice fellas.

I've had a number of images accepted by PSC that I took with my little D-Lux. I really like it for convenience and I find the LCD viewfinder liberating. It's great for macro too.
The noise problem, especially in low light, has ruined a few too many images though - for the price it's not really good enough. I think in retrospect I'd buy the Panasonic - but I was hooked by the leather case and that little red dot!

I've used this camera for a couple of years now. It's a very nice size which makes it useful nearly everywhere. It's incredibly flexible. I thought I would miss the view finder; I don't. I love shooting RAW, but if I know I'm shooting fast shots, I need to shift to jpg. I like the Leica look of the shots; some won't. Get the leather Leica case!

I have the Panasonic version of this camera.

That being said, I'm not sure why you're advertising either of them from the front page of a site that professes to sell the usage rights to professional photography.

I think Photoshelter needs to decide who its customers are... photographers or image buyers.

speaking of Leica

http://web.mac.com/kamberm/Leica_M8_Field_Test,_Iraq/Page_1.html

the old M8 comes in for a thrashing, which makes you thank about the integrity of this cheeseburger

I have to confess I have no idea what photoshelter does, really. I think you can put your pictures if you're a photographer so it can be bought, etc? but it's not my industry, much easier not to starve on what I do for a living, so on so forth.

I do quite like the daily dose of imagery from this blog, and the discussions on cameras.

Yes, this comment was just to offset Alan Copson, I done got me a G9, which I learned about from here.

http://www.flickr.com/photos/28333504@N07/

just to show you how great is the leica d-lux 3.