Aside from the smaller size and portability of the S90, I believe the LX5 is a superior camera with regard to features and handling (for my purposes). Having said that, it's too bad the LX5 doesn't slip into my pocket like the S90. But if it were built for pocketability Panasonic probably would have omitted the hot shoe and the ergonomic tacky-surface grip. We might also have lost the F2 wide angle lens. Omission of these features would have been terrible. I love 24mm wide and find on a trip I take perhaps 25% of my images at the 24mm wide setting. I have to assume that a lens of this specification cannot be engineered to retract fully into the body. And this leaves us with some lens protrusion even when powered down, and an inconvenient lens cap. Actually, I don't find the lens cap itself inconvenient, but the fact that the camera needs to be fully powered down before you can put the lens cap on is annoying.
When it comes to image quality, I believe it's a toss up. The RAW files on both are "good enough", and after a few in-camera adjustments I'm happy with the jpegs from both. Let me note, however, that this is based on viewing images at "normal" viewing distances, both on screen and in prints, the largest of which has been 8x12 and 9x12. The sensors on both of these 10 megapixel cameras are essentially the same size, and bigger than what are found on 99% of all compact cameras. All things being equal, larger sensor size improves image quality.
So which do I prefer? A camera strong in features with a robust feel like the LX5? Or, a smaller, sleeker camera with slip-into-your-pocket portability like the S90?
My initial response is that I prefer the LX5. But when I did some filtering in Lightroom I found that over the last nine months (the time period in which I owned both cameras) I have used them equally, as I have kept 900 images from each camera. What gives?
Looking at the 1800 images catalogued in Lightroom, I see that I use the S90 mostly when there is a "point and shoot" situation. I usually shoot the S90 in P-mode, auto ISO, RAW + JPEG, AWB. I typically dump the RAW file after determining that the JPEG is good enough. I'm picky about white balance so I might use the RAW if I need to make a white balance adjustment, or if I had been lucky enough to capture a potential "portfolio" shot. The additional features I use on the S90 are (1) plus or minus EV compensation while viewing the histogram, (2) three-shot exposure bracketing when appropriate for perhaps a possible conservative HDR, or when I am just not sure what exposure I want, and (3) the lens ring set for step-up zoom.
On the other hand, the LX5 goes with me when I'm being more serious about photography. I've used my Olympus 36R flash on it and love the results, and I have used a lens adapter for attaching a polarizer or closeup lens like the Raynox DCR-250. I also bought the LVF-1 viewfinder which I find very helpful for composing images depending on the amount and direction of sunlight. Of course, all of this does make for an expensive kit! But I already owned the flash and filters.
Here are some of my favorite features on the LX5:
1) The function button set up for auto exposure bracketing
2) The ability to shoot 3 exposure bracketed frames reasonably quickly (I think about 2-3 fps), though it takes a while to write to file. This helps when exposure bracketing for HDR use because it minimizes any hand movement between shots. (The S90 is a lot slower in taking 3 bracketed shots, perhaps 1 fps.)
3) The ability to set a minimum shutter speed when in P-mode. I've set up C-2, C-3 and C-4 custom modes for minimum speeds of 30, 60 and 125 seconds. The speed will automatically be bumped up if there is too much light for the minimum speeds. (And by the way, the LX5 has a maximum speed of 1/4000th second!)
4) AEL/AFL is set for focus lock. (The S90 has this button also.)
5) The ability to shoot in M-mode with autoISO. (I can't do this on either my S90 or G9.) This is one of my favorite ways to shoot. The operator picks the speed to match the subject and picks the F-stop for the desired depth of field, and the camera adjusts ISO to give the proper exposure based on the metering system you've selected
6) The ability to use an add-on flash or add-on viewfinder.
7) The ability to add filters via a lens adapter.
I guess the fact that I give these two cameras equal time tells me I like them equally... but clearly for different reasons. Frankly, when I first bought the LX5 I thought I was being a bit wasteful with my money because it would be redundant with my S90. I am now glad that I have both. They fit different needs.
I will enjoy watching the evolution of both series. The GF-series m43 cameras are nearly as small as the LX5. And if you love Olympus colors, the new Olympus XZ-1 is providing worthy competition to the S-series and LX-series. Samsung has a contender, too. This is definitely a hot sector of the market.