I faced a similar choice recently and chose the G7. As I do not receive commission from Canon I'll not aggressively sell my choice. Here were its highlights.
- The lack of RAW is a drawback...but not nearly as significant as many would moan. The advent of Adobe's Lightroom, which I use daily, has dramatically enhanced my ability to adjust even an 8-bit cooked image's tonality. Frankly, although my S70 featured RAW files it was a pokey feature that really heated-up the camera after a few serial shots. I could also never get S70 RAW images to really look good. So I don't really miss RAW on the G7. Nuff said.
- The G7's lens is sharp...really sharp. Yes, it's widest focal is 35mm (vs 24mm) and it's a stop slower than it might be. No real big deal.
- The G7's feel is much better than any p&s I've used, including the Pannys. Very substantial and easy to manage.
- Manual exposure is a cinch to use. Manual focus on the G7 is also relatively simple but, frankly, it's a waste of time on cameras with such tiny sensors.
I could go on but I doubt it will make a difference to anyone's decision. So I'll just leave it by saying that
I've been greatly enjoying my little G7 for the past two months. Enjoy whatever you ultimately choose.