Hi Sara,
I have the GF-1 (with zoom) and my daughter has the LX3 (the LX5 is very similar).
I'm probably repeating some information from others above, but here goes.
Given that both cameras come with an LCD screen but can accept the same EVF if you want to use one, they're equal in that respect.
There are three crunchy decisions to make and they are about size and how you'll use the camera.
The LX5 is way smaller than the GF1, especially if you like to have a zoom lens. The zoom for the GF-1 is quite OK but turns it into a much bigger camera that won't fit in a coat pocket - you'll need a shoulder bag of some kind. The LX5 is much easier to carry and is less obtrusive.
Which brings us to the question of zoom or fixed focal length lens. The LX5 lens is a zoom with a useful range. If you like to shoot in many different situations without having to move yourself closer or further away from the scene to frame it, then a zoom is a great convenience. You CAN get a zoom lens for the GF-1 but as I noted above it increases the size and bulk appreciably. You may not want that. But if you're going to be satisfied with a fixed focal length lens then maybe you should also consider the new Fuji X100 as an alternative to a GF-1 with fixed lens.
The other thing, also related to how you want to use the camera, is what you intend to do with the photographs. If you don't intend to print larger than A4 size, or will mainly post your photos on Flickr or some other internet gallery for people to see then you don't need a larger sensor than the LX5 has. You will not be able to see any difference in quality between the cameras at that level of enlargement. In fact, you could probably print LX5 images larger than A4 - up to A3 - without a problem unless you're a perfectionist and want to enter competitions at a camera club or something like that. For family and friends viewing the LX5 will be adequate. So the question for you here is, what are your photographic ambitions and would the LX5 meet them or do you think you'll want to be able to use different lenses from time to time?
There's one final element to consider. My daughter has the LX3 as I mentioned and is delighted with the images she gets from it. But she also has a Fuji S9600 DSLR that's about the same size and weight as a GF-1. She still uses that and likes it when doing "serious" photography as opposed to "casual" photography.
Why? Well, yes, the image quality is better on big enlargements, the zoom range is greater than the LX3 and it has a "proper" viewfinder built in. It also relates to how the camera feels in the hand. Best advice here is to see if you can find an opportunity to at least fondle each camera for 10 or 15 minutes but better still, if you know people with the cameras you're considering, ask if you can have a "play" with them for an hour or two. You might find that in the end it comes down to the feel in the hand rather than the technical specifications. If it feels "right" then you'll use it more than if it feels a bit big or awkward.
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After all that I just read your last message which changes things a bit. If you have a DSLR and a Leica already, and you're not a zoom person then maybe the choice is between the LX5 and the Fuji X100. If it were my decision I'd go with the Fuji for the viewfinder alone.
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