The GF1's body (without a lens) measures only 4.7x2.8x1.4 inches and weighs just over half a pound-about half the weight of the Canon EOS Rebel XS, for instance. Even with the 20mm f/1.7 kit lens, the GF1 is still less than 1 pound, while the 14-45mm f/3.5-5.6 kit zoom brings it up to 1.2 pounds.
And the GF1 autofocuses faster than most compact cameras. Plus, you can switch lenses.
There aren't many dedicated lenses to choose from yet, but since both Panasonic and Olympus are making Micro Four Thirds gear, new optics may come quicker than you'd expect.