First off, E-P2 buyers might be feeling a little silly now, at least if all they were looking for was a big-sensored point and shoot. Sure, the E-P2 packs more "professional" details, like dials for shuffling through manual settings, and a few advantages on the imaging front like better image stabilization and faster max shutter speed / higher ISO, but for about half the price the E-PL1 offers the same sensor and most of the same capabilities of its big brother. Even the electronic viewfinder that comes standard for the E-P2 as a hot shoe accessory slots into the E-PL1 just fine, and the addition of a flash adds insult to injury. For people who know their way around aperture and shutter speeds, and rely on those manual controls to make the camera do what they want, there's still plenty to love about the E-P2, but for folks that just want something easy to use which turns out good pictures more often than not, E-PL1 seems to be just what they were waiting for.
Aesthetically the camera takes a hit in comparison to the E-P1 and E-P2, with looks and build quality more in line with its price. We'd say for the most part the build feels on par with a budget or mid-tier DSLR, but the buttons on the back feel positively cut-rate, and the plastic 14-42mm kit lens is almost unsettling -- though certainly not as terrible as the sort of stuff manufacturers are putting on those cheap-as-dirt super zoomers these days. The slightly smaller 2.7-inch LCD is the same resolution as the E-P1 and E-P2's, but when you don't have an optical viewfinder, every fraction of an inch counts. The bottom door for the SDHC card and battery is solid, and the rubber flap on the side to expose USB and HDMI plugs isn't going anywhere.
This is where the camera really shines. Again, in exchange for convenient, physical manual controls the camera offers some high-end imaging at a below-DSLR price. Luckily for us, Olympus has actually done a pretty good job at its consumer-friendly controls in one of those "you're dumb, let us make the picture pretty for you" sort of ways. This is most evident in iAUTO mode. Instead of selecting scene types, the camera presents an almost Photoshop-style set of manually controlled slider settings. The thing is, the sliders aren't working some sort of post-processing magic, but are instead just novel terms or groupings of traditional photographic controls like ISO, shutter speed, and aperture -- without resorting to saying those scary words. For instance, "blur background" lets the user bump their bokeh (out of focus parts of an image created by a shallow depth of field) without knowing that it's actually the aperture size that's doing it. Similarly, "brightness" seems to tweak ISO, but Olympus manages to even throw in individual tweaks to highlights and shadows if you want to dive deeper. Probably our favorite option is the simple "color image," which lets you set white balance with a dirt simple warm-to-cool slider, taking the guessing game out of choosing an appropriate mode for the lighting conditions. Unfortunately you can't mix and match iAUTO settings, so you'd better get what you want out of that particular slider.
The other big downfall of iAUTO is that it has no bearing on the flash -- you'll have to leave things up to the whims of the camera's automatic settings, or go manual to tweak things when blasting the flash. At least there are a number of varieties of flash types to choose from in the menus, and it does a decent job of blowing out a scene, as long as that's what you're looking for.
Another thing that might seem like a gimmick is the "art" filters, and while they're much more gimmicky than iAUTO, the inclusion of a faked tilt-shift "diorama" mode is pretty great -- particularly due to the fact that it even works in video mode, creating a nice time lapse effect.
Speaking of video, let's speak of video. We're pretty happy with what we see here. These Micro Four Thirds cameras are turning out to be some of the best ways of capturing video on the cheap known to man, and the E-PL1 turns around quality 720p footage on a budget. The biggest drawback, as pointed out elsewhere, is the audible auto focus noise made by the camera, which has dogged it since the E-P1, and is perhaps accentuated here by the plastic build of the camera and kit lens. Still, it's not so bad as to be annoying for a vacation video or other casual use, and anyone who's so concerned about audio as to make or break their production probably wouldn't want to be relying on the noisy, mono mic inside the E-PL1 anyway. Luckily there's that hot shoe for adding an external mic, though we'd really like it if Olympus just broke down and built a 3/4-inch jack standard into this thing. We like the image quality, speed of autofocus, and convenient recording of the E-PL1 to be too hung up on this, but it's still a bit of an issue despite Olympus' protestations otherwise.
Not much use for words here, check out our examples below. The biggest foibles we saw were some telltale glow on bright edges and high noise on the higher ISO shots.
Full crop. Left to right: ISO 1600, ISO 800, ISO 200
ISO 1000, blow-up shows off the edge glow.