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As several others have noted here, I deliberated for months between buying the Canon SX20IS or the Panasonic DMC-FZ35 before finally pulling the trigger on the FZ35. This was a particularly tough decision for me, as I had previously owned a Canon S3 that had served reasonably well. Although the S3IS provided thousands of suitable images, I was never as happy with its optical sharpness as I had been with that provided by a Sony (DSC-707 model) and its Carl Zeiss lens. Although featuring only 5X power, my memory of that wonderful Zeiss lens always stirred a slight discontent with respect to my opinion of the Canon S3IS.
Because I didn't want to "upgrade" once again without at least matching the optical quality of the Sony, I paid special attention to how users and professional reviewers appeared to rank the Canon SX20IS and Panasonic DMC-FZ35 in that respect. From what I gleaned from hundreds of reviews, the FZ35 seemed superior to the 20IS with respect to image sharpness. Also, from a handling standpoint, I didn't care for the bulkier size and somewhat heavier Canon. Therefore, based mainly on published and online reviews (as I was never able to actually hold a FZ35 beforehand), I bought the Panasonic, sight unseen, through Amazon.
After experiencing the results of roughly 500 shots now, the bottom line is that I am very happy to own the Panasonic. Although I am not positive that, under the best of lighting conditions, the FZ35's resolution is quite on par with that of my previously owned Sony DSC-707, it does appear reasonably close. Because of its 18X zoom and the fact that the dynamic range of the FZ35 is much more forgiving than that of either my much older Sony 707 or my relatively recent Canon S3, the Panasonic is (overall and unequivocally) the best camera I've used to date.
So, I am extremely pleased with my Panasonic DMC-FZ35. I don't expect to miss not having the Canon's hot shoe, nor have I any difficulty accepting Panasonic's proprietary battery pack. My most serious gripe stems from the fact that most settings are menu controlled (duh!). But, the learning curve for how all the different menus overlap and sometimes affect associated configurations is STEEP--at least for me, it is. I didn't realize until I bought this FZ35 how digitally challenged I must be! Whereas the Sony was as easy as "falling of a log" to use and the Canon was perhaps a notch or two more difficult, this Panasonic has definitely stretched my perseverance! However, the more I iterate between studying the printed-out manual (218 pages!) and hands-on experimentation, the more adept I am becoming. Of course, the redeeming counterbalance to the FZ35's complexity is its automatic (IA) mode, which I've discovered is not all that bad!
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