When Panasonic announced its first interchangeable-lens camera, the Lumix DMC-G1, it said the camera would cost less than $800. Today it's official: $799.95 with the 14-45mm f3.5-5.6 (28-90mm equivalent) lens.
That price puts it in direct competition with inexpensive dSLR models like the Nikon D60 and Canon Rebel XS; it's a bit smaller compared to those, but lacks an optical viewfinder, which is a significant disadvantage. And it's significantly more expensive than more compact, fixed-lens enthusiast competitors like Panasonic's own LX3 and the Canon PowerShot G10. As yet, performance is a big unknown.
The other factor to take into account is lenses. It'll take a while for a big aftermarket to develop--if a sizable one develops at all--until which time new lenses for the G1 and Olympus' model will likely be few and far between. Costwise they seem competitive, however; for instance, the second lens offering from Panasonic, Lumix G Vario 45-200mm f4.0-5.6 is slated to cost $349.95, though street prices will probably be a bit cheaper. In comparison, Canon's 55-250mm lens commonly costs about $275-$300. I consider that the same ballpark.
This is shaping up to be quite an interesting model. It's slated to ship next month.