Micro 4/3 cameras

I am looking at a micro 4/3 camera for a gift to someone who is out growing point and shoot, but not ready for the size of the DSLR.

I am leaning to the powershot 40 for this purpose as it fits the niche

but the micro 4/3 are small and might be a better choice.

Specifically the Lumix G3 as the newer generation likes the flip out screen.

Comments ?

For the price of an Olympus Pen or Panasonic GF you can get a basic Rebel. Rebel's APS-C (larger than 4/3) sensor will allow shallower depth of field and better noise control. Rebel's autofocus speed can be matched only by latest (most expensive) 4/3 cameras. If you do not care for AF speed look into Samsung NX200, also with APS-C sensor.
Another reason for a Rebel is that once that person outgrows the 4/3 system and is ready for a SLR, he/she will find oneself with a body and potentially a few lenses that will be no use with a DSLR system.