Overall conclusion
There has been so much talk about what the G7 is not that I think it's only fair to look first at what it is; a superbly built, comprehensively featured and highly desirable camera that packs a lot of the functionality of a digital SLR - and an image stabilized 35-210mm lens - into a solid, compact body. It also has virtually no competition - there are super zooms with similar feature sets, but all are bigger and heavier. Image quality is excellent at lower ISO settings as long as you don't expect to produce poster printers - and you know what you're doing exposure-wise; this is not a camera for the beginner.
Canon's relatively 'hands-off' approach to luminance noise reduction produces results at ISO 200-800 that - whilst not a patch on any SLR - at least don't sacrifice all their detail for a 'smooth' result.
That all said you can't help but feel a twinge of disappointment with the G7; a feeling that Canon could have taken a few more risks rather than producing what is, essentially, a souped-up A series camera with a couple of token nods to the G series' tradition and a CCD stuffed to the gills with pixels to such an extent that it compromises image quality. I am also disappointed by the loss of raw capture (even if I only use it for 'special occasions' it can be a life-saver) and the vari-angle screen (which I found myself missing on more than one occasion).
There is undoubtedly a place in the market for the high class compact - in fact people are crying out for a compact camera that offers a true alternative to an SLR for anyone wanting quality without bulk. But to really offer this the G7 would need a different sensor that was more capable at higher ISO settings and that offered better dynamic range. The output from the G7 isn't essentially any different to any of the handful of other cameras that share the same sensor once you get over ISO 200, and isn't visibly a whole lot better than the 7MP G6, either.
In my opinion, Canon's product planners made two mistakes with the G7. First they went for the easy sell; smallest possible body, big zoom, lots of megapixels (just like everyone else), and in doing so lost two of the things most unusual (and appealing) about the G6; the F2.0-3.0 maximum aperture (great for low light, essential for cutting down the depth of field) and the LCD status panel. Secondly they refused to risk producing an expensive camera (the G7 is towards the top of the price range for a compact, but it's by no means expensive for what it is). The G7 I want would have a bigger sensor (or at least one with fewer, more sensitive pixels), a shorter but faster zoom and a vari-angle screen. And if it produced superb results I'd be prepared to pay through the nose for it. But that's not what I got, and to be honest it's unlikely to happen soon. What you've got is another superb camera that simply makes the best it can of a rather less impressive sensor.
And so, in the final analysis, how is the PowerShot G7 to be judged? It doesn't, in my opinion, fill the big shoes left by the G6 and the G5 before it, simply because it has lost too many of the 'semi professional' features that made those cameras so unusual - and the image quality at anything over ISO 100 is not significantly better than anything else on the market with a small high pixel count sensor. Put aside for a moment the whole 'G series legacy' issue, however, and the G7 undoubtedly stands on its own merits as a high quality compact and a possible DSLR alternative (or second camera).
= sucks please read the review before you post
once again g6 or g9