This of course begs the question of just what's going on: Why did this lens' IS system so clearly impact best-sharpness performance? A related question is why did we find slight blurring in the non-IS results at such high shutter speeds?
Our theory is that, in common with other Micro Four Thirds cameras we've tested, the Lumix G3's shutter produces vibration that can cause blurring even at very high shutter speeds. The issue with Micro Four Thirds shutters (at least in cameras we've seen to date) is that the shutter has to snap closed before the exposure, and then open again for the exposure itself. This is in contrast to conventional focal plane shutters, which only have to move across the frame once per exposure. When a Micro Four Thirds shutter snaps closed to start the exposure, it can set off vibrations that affect the exposure. Because these vibrations can be at a fairly high frequency, they can cause blurring even at higher shutter speeds than one would expect. We've found that these vibrations can sometimes interact unfavorably with an IS system, with the IS system trying to correct for camera movement that isn't actually happening.
We first encountered this phenomena in the original Olympus E-P1, where the vibration was enough to cause a doubling of fine image detail at certain shutter speeds. Olympus later patched the E-P1's firmware to minimize the impact of shutter vibration on the IS system, which helped mitigate the problem. (You can read our exhaustive treatment of the Olympus E-P1 blur issue for a complete explanation of the phenomena.)
In the case of the Panasonic G3, the shutter-related vibrations were relatively small, so the decrease in sharpness in the IS-off case was fairly small also. Bottom line, if you only enable image stabilization when you actually need it (at slow shutter speeds) the Panasonic 14-42mm f/3.5-5.6 G provides a very useful level of shake reduction."