The most substantial upgrade is the lens. The LX3 had a 2.5x zoom lens, equivalent to only 24-60mm but with a fast maximum aperture of f/2 – f/2.8. This was great for landscape shots but less than ideal for portraits. The LX5 has a new lens with 3.8x zoom, equivalent to 24-90mm, but this hasn't meant sacrificing the fast maximum aperture, which is now f/2 – f/3.3. The front element of the lens is also slightly recessed, making it less vulnerable than the protruding lens of the LX3.
More significant changes have taken place internally. The LX3's outstanding 10.1 megapixel 1/1.63-inch CCD sensor has been redesigned. I must admit I was expecting that Panasonic would equip the LX5 with the new back-illuminated CMOS sensor technology, but it has stuck with CCD, as have Nikon and Canon for their new top-end compacts. The LX5's sensor now has larger photocells which should produce increased colour saturation and dynamic range. It also now supports an aspect ratio of one to one, selected as before by a slider switch on top of the lens barrel.
The image processor has also been upgraded to the Venus Engine FHD, providing faster signal processing, better low light performance and reduced image noise, as well as a continuous shooting speed of 2.5 frames per second.
Another significant improvement is the optical image stabilisation system, which has been upgraded from Mega OIS to the more effective Power OIS, offering around three and a half stops of additional low-speed stability. Battery duration has also been slightly improved, from 380 to 400 shots on a single charge.