The L3 is a pretty decent little camera but compact cameras have come a long way in the last few years.. I'm particularly fond of optical image stabilization because I like to take a lot of available light shots in fairly dimly lit environments. I'm kind of a stealth photographer at times and I don't like to use the flash a lot because it attracts attention to the fact that you are taking pictures.
Most brands have OIS now, I'm partial to the Panasonic Lumix FX07 because for the price it has OIS that works quite well and a 28mm eqivalent wide angle setting which allows you to get in more scenery in one shot than most compact cameras which start at around 35mm on the wide end. The difference doesn't sound like a lot but it is surprising how much more you can take in with a 28mm than a 35mm (35mm film camera eqivalent).
For instance, here is an available light shot I took the other night in a fairly dark area in a sports bar, the shutter speed was low enough that the kids that were moving are just a blur but the background is sharp because the OIS helped steady the image, I made no particular effor to hold the camera steady, just held it in my hand with thumb and middle finger while operating the zoom and shutter with my forefinger like I usually do.
