Had a long talk with the wife about what she wanted out of a camera. Basically she wants something compact that she can fit in her purse and that has high IQ. So what I'm thinking is that I may get one of the smaller M4/3 for her (and me) with a pancake lens and keep the D40 for a bit (or even update the body and use the lenses I have). Then I could build a system for kids/indoors/etc (i.e. short distance) and a DLSR for long wildlife sort of things.

Will your wife be happy without zoom? My girlfriend doesn't like the 3x range of the kit lens on our new G3 compared to the 5x on her old point and shoot.

AF on the Nex cameras is slower than m43, so that's another downside. On the upside they are excellent cameras for use with legacy (manual focus) lenses.

Hmmm, I've been thinking as the OM-D as a kind of 'compromise' choice but it may end up being the best of both worlds instead of giving up on certain things. Wife wants compactness and high image quality - think the OM-D might do both those well. She mentioned point and shoot but I'm not sure I'd be happy with another point and shoot (and I'd like to be able to use the camera some too or I'm still looking for a lighter alternative to the Dslr on the short end).

I was worried about the long end on the OM-D but any AF has to be faster than what I have on the D40 I'm guessing.

Man, to many variables. Wish there was someplace where I could find all of them to play with them but doesn't seem to be in KC. A local dealer across town had some OM-D's when I talked with him last week and carries Nikon and Canon but would have to go somewhere else for Sony and nowhere apparently carries Fuji X series in town.

I have an X100 and an EM5. I also had a NEX-5n, but I sold it a while back.

The X100 is actually pretty quick to focus with the updated firmware. The most current firmware is 1.3, and it is quick and rarely misses focus. I would say it is a couple of tics slower than an EM5. It is noticeable, but I wouldn't say that it is slow to focus, and I don't think it would affect your shooting too much. It feels as fast as the EM5 with the 20mm. It is not near as quick as the EM5 with an Olympus lens mounted. The EM5 just flies with an Olympus lens.

The NEX was nice for legacy glass, but if you want autofocus, there are better choices. There is only a handful of e-mount lenses, and the ones that are good are expensive. The 24mm Zeiss is over a grand, and for that price, you might as well get a lens and extra body and buy a X100. But focus peaking is amazing. It feels like a rangefinder if you are taking a picture of something really contrasty. Peaking is not great if you are not shooting something with contrast however. Also, when I had the NEX-5n, the EVF was beautiful, but peaking did not work as well with it. The peaking lines were not as vibrant. I am not sure if Sony ever addressed that.

I think the NEX system would be killer if they had some lenses, but they don't and it doesn't look like lenses are a priority for Sony. They have released five or six bodies, but only a handful of lenses.

I am selling my X100 on the forum and keeping the EM5. It is beautiful, takes stunning pictures, and there are tons of lenses. And you can't beat the mu43 community, right?

Watched some reviews on some of the Nikon lenses that I thought I wanted. I can't see (even on a D5100) where they focus any faster and except for the 'Holy Trinity' of super heavy 2.8 lenses don't offer superior image quality. For instance, the AF-S 35 1.8 (IIRC) looked horrible with all sorts of chromatic aberrations. IF I do go for a DSLR I'm not thinking I'll do anything Nikon.

However, I've seen some really good lenses for m4/3 so I keep coming back to the OM-D.

I tried the NEX-7 for a couple of weeks but returned it. To me the points were:

Pros:
1.) Great images at low ISO if the lens was stopped down
2.) Good grip
3.) Great size EVF

Cons:
1.) Few native lenses, only good quality were Zeiss 24mm f1.8 and 50mm f1.8.
2.) Very noisy at high ISO, much worse than a Nikon D7000 for example
3.) Very primitive wireless flash support (as far as I could tell)
4.) EVF while large, requires getting eye close, has limited angle range (need eye right in the center to avoid distortion), and gets very slow and noisy in low light.
5.) OK focus speed in good light, terrible in low light, unable to get focus lock in many instances in a house at night with normal incandescent lighting

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Olympus OM-D E-M5, Olympus 12-50mm, Olympus 45mm, Olympus FL-300R

I think that would be a EPM1 or GF5 with the 14mm pancake. There's a small Panasonic zoom too. Or the Olympus XZ1 for real compactness. Neither option has to be a whole lot of money, and you can always get yourself an OMD later.

Understand the push for best IQ for your needs, but the lady has to carry it, The EM5 is not that much larger, but its metal body and full boatload of electronics adds up to a heavy purse. Jeez, my wife's purse only has coupons and plastic cards in it, but it weighs more than my camera bag with gear in it.

My setup is the Canon 7D + 400/5.6 for wildlife, and GF3 + 20/1.7 for a walk around - surprisingly, even tho I have the 14-42z and 14/2.5, the 20/1.7 stays on 99% of the time. I also have a GH2 + 100-300 dedicated for video.

Further clarification from the other half: size wise she wants it just a bit bigger than her iPhone 3. Any M4/3 still in the running for her?