The primary problem with small sensor cameras like the S90 or G11 is that you really can't print eye-popping images at full size. 9x13 prints coming from these cameras aren't the greatest, and there are noticeable differences in detail resolved when prints are printed at 240+ dpi between the compact camera and larger sensor cameras like the DP2, E-P1, or E-620.
More important to me is the color depth and dynamic range offered by a larger sensor. It gives you more latitude in post processing to deliver an image that expresses your creative vision. The extra information captured by the larger sensor also gives a sense of depth, or dimensionality, to the images, like a good chrome film. Small sensor cameras are notorious for their ability to deliver images that just ... look ... digital.
The final advantage I like for a larger sensor camera is the flexibility you have with wide aperture lenses that create narrow of depth of field. An f/2 lens on a small sensor camera cannot isolate the depth of field to the extent that an f/2 lens on a larger sensor camera can.
For example, if I use the Lumix 20mm f/1.7 lens on an Olympus E-P1, I can create a depth of field at f/1.7 that would only be equivalent to an 8mm lens (reasonable) at f/0.7 (unreasonable) on a camera with a sensor the size of the one in the S90. Clearly, that ain't gonna happen on a small sensor camera.
Alternatively, let's look at what the f/2 and 28mm (equivalent) wide lens of the S90 is equivalent to on the E-P1 (or E-620). f/2 on the S90 translates to abut f/4.8 on the E-P1.
So, be cautious about small sensor cameras touting "fast" and "wide" apertures, because they aren't as fast as you think when viewed in the standard context of 35mm photography.
Conclusion: larger sensors give you a lot more creative freedom than small sensors.
Stay tuned, as we are wrapping up our E-P1 review in a few weeks, and both the E-P1 and GF1 reviews will be published in the next several weeks at BPL.