My thought: Panasonic Lumix DMC ZS7 is a good camera.
The LCD of the Panasonic Lumix is great. The downside however is that the pictures look much more bright and crisp on the LCD in comparison to what they look when viewed on my laptop. On my desktop however, for which I have a much bigger and better display the pictures look more closer to the ones displayed on the LCD. Also, the pictures displayed on the LCD are towards the saturated side.
About the pictures: All were taken at 12 Megapixels. For uploading all were resized to 1024 x 768 using Gimp. No other editing has been done. If you want to see the original sized image or want to know the EXIF information then let me know.
Do remember that ZS7 does have the aperture priority, shutter priority and the manual mode. However the pictures here are taken mostly using the auto mode and some using the program mode. Basically using it simply as a "point-and-shoot" camera.
(1) "iA" mode with flash off: simply point-and-shoot
All these pictures were taken in the "iA" (intelligent Auto mode). The only option which I set was for the flash to be off. In the iA mode the camera does seem to "blow out" the "highlights" i.e. the bright parts are too-bright. This is most visible in the outdoor pictures. But I think that is done by a lot (if not all) of the compact cameras. If you see some noise in the indoor pictures its mainly due to the ISO being higher as its selected by the camera itself. You can force the ISO to its least value in the "P" mode.
(2) "iA" and "P" modes"iA" - intelligent-Auto mode. The camera selected all the settings I just forced the flash to be off.
"P" - Program mode. I set the ISO to 80 in order to have least noise. All the rest of the settings were selected by the camera.
"Intelligent contrast" and "intelligent resolution" option available in the "P" mode were set to "Off".
Here are the comparisons of pictures taken using the iA and the P mode. The description follows the image.
Taken using the iA mode
Taken using the P mode.
Taken using the iA mode.
Taken using the P mode.
Taken using the iA mode. Here the bright portions are kind of too bright.
Taken using the P mode. Here in addition to setting the ISO the exposure compensation was set to -1 1/3 to make the picture less bright in comparison to the one in the iA mode.
Taken using the iA mode.
Taken using the P mode. Here in addition to setting the ISO the exposure compensation was set to -1 to make the picture less bright in comparison to the one in the iA mode.(3) Outdoor in the sun, indoor with flash and the issue of "highlight clipping" i.e. bright (white) areas being too bright
Highlight clipping = bright areas being too bright kind of blown-out is a common thing. My old Sony DSC-W1 had this issue. My Nikon D40 has that issue. How much is that an issue is, well, camera dependent. Here I'm uploading some pictures which were taken using the ZS7.
Remember:
(a) All these pictures were taken in the Auto mode.
(b) All compact cameras suffer from highlight clipping.
(c) You can easily get better results simply by switching to the "P" mode and forcing the picture to be under-exposed (EV value -ve). That is no rocket science.
(d) Mostly pictures come out best in soft lighting condition not during sunny afternoons, or when the subject is too brightly lit.
(d) In some of the pictures I think the camera did what any other compact camera will do.
(e) Do not make decisions based on just these pictures as you have nothing to compare these to.
Descriptions follow the pictures.
Taken in the iA mode, well lit conditions.
Taken in the iA mode, outside, on a sunny afternoon.
Taken using the iA mode, inside well lit conditions.
Taken in the iA mode, no flash, late in the afternoon. The blinds on the window were open. Here you see the bright window area being too bright.
Taken in the iA mode, indoor, late in the evening, flash = on.
Taken in the iA mode, indoor, late in the evening, flash = off.
Highlight clipping = bright areas being too bright kind of blown-out is a common thing. My old Sony DSC-W1 had this issue. My Nikon D40 has that issue. How much is that an issue is, well, camera dependent. Here I'm uploading some pictures which were taken using the ZS7.
Remember:
(a) All these pictures were taken in the Auto mode.
(b) All compact cameras suffer from highlight clipping.
(c) You can easily get better results simply by switching to the "P" mode and forcing the picture to be under-exposed (EV value -ve). That is no rocket science.
(d) Mostly pictures come out best in soft lighting condition not during sunny afternoons, or when the subject is too brightly lit.
(d) In some of the pictures I think the camera did what any other compact camera will do.
(e) Do not make decisions based on just these pictures as you have nothing to compare these to.
Descriptions follow the pictures.
Taken in the iA mode, well lit conditions.
Taken in the iA mode, outside, on a sunny afternoon.
Taken using the iA mode, inside well lit conditions.
Taken in the iA mode, no flash, late in the afternoon. The blinds on the window were open. Here you see the bright window area being too bright. 
Taken in the iA mode, indoor, late in the evening, flash = on.
Taken in the iA mode, indoor, late in the evening, flash = off.
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