I had become very impressed with the Canon G10 after just a few days of earlier light-duty testing. Each evening that week I would sit with my 15" Macbook Pro reviewing the day's files. At one point I found myself looking at raw files on-screen and not being sure if I was looking at Hasselblad P45+ files or Canon G10 files. That includes at 100% onscreen enlargements.

Now, I'm no newbe. After some 50 years in this industry I know what I'm looking at, be it a screen blow-up or a print, and I certainly don't confuse how something looks on a 15" laptop screen (though properly profiled and calibrated) with how it will turn out on a critically produced exhibition-quality print. But nevertheless, I was curious about what I was seeing. In fact I was more than curious, I was somewhat amazed [that's like being "a BIT astonished" :-)  - Friday open thread].

...

Over a two day period I invited photographers and local industry professionals to come to my print studio and look at a series of 13X19" prints
...

In every case no one could reliably tell the difference between 13X19" prints shot with the $40,000 Hasselblad and Phase One 39 Megapixel back, and the new $500 Canon G10. In the end no one got more than 60% right, and overall the split was about 50 / 50, with no clear differentiator. In other words, no better than chance.

In fact it was the H2 system's narrower depth of field that occasionally was the only clear give-away. Some viewers eventually figured out that the prints with the narrower depth of field were from medium format, while other photographers chose the G10 images because with its wider depth of field it created an overall impression of greater sharpness.

Needless to say there was much shaking of heads and muttering. Could this be? Could a $500 digicam equal a $40,000 medium format digital system in image quality, at least in prints up to 13X19" (Super A3)?
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But, with all of these caveats, the take-away as I see it is that the new Canon G10 has crossed a threshold; one in which an inexpensive pocket camera can produce very high quality images, at least on moderate sized prints, which is what most photographers end up making.

Will I be selling my Hasselblad and Phase One back? No, of course not. Why would I? Each system has its place and specialized function. Indeed I'm really excited about testing the new Phase One P65+ and to acquiring one as soon as it becomes available.

 But, the next time I take a walk in the woods, or go on a family vacation, I know which camera is going to be along for the trip, nicely tucked away in my jacket pocket. The Canon G10.

http://www.luminous-landscape.com/reviews/kidding.shtml

You don't get anything like focal range of the lens recommended by Len, but then this whole camera - with video too ! is cheaper than that lens, and another pro finds it OK:

Another change from the G9 is the lens. It has a shorter maximum focal length, but gets wider. Instead of the G9's 35mm to 210mm (equivalent) lens, it has a 28mm to 140mm (equivalent) lens. The wider angle is frequently appreciated, and I rarely miss the longer telephoto on the G9.
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Canon has now demonstrated that a small camera with a small sensor can provide the ergonomics, speed, flexibility, and image quality that would please most serious photographers.

http://theonlinephotographer.typepad.com/the_online_photographer/2008/10/canon-g10-revie.html

From Amazon:

I was able to get extremely sharp photos in macro mode (closeups of bees in flowers, that kind of thing), again without a tripod.

My personal preferences in this stuff runs towards the Ricohs - Sam's pictures above were taken with a €299 R7 - and they specialize in  close up stuff - they'll focus down to a few cm on front of the lens. My sister-in-law bought the R8 when she started asking the same question as you and she's happy with it. These are tiny pocket cameras.    

I'd say a G10 would be too much as well, and I hate the interface on that class of Canons. Anyway, they're too goddamn big.