I am going to concentrate on the Micro Four Thirds system because this system gives you the BEST compromises on size, weight, image quality and versatility that larger sensor cameras just can’t match.

This does not mean there is no place for larger sensor cameras – of course there is, particularly if you want a little more image quality at high ISO, more megapixels for landscapes,  even shallower depth of field, or you really need remote radio TTL flash (which has not made it to Micro Four Thirds – yet!).

First the camera:

Personally I would buy a 2nd hand Olympus OMD E-M5 – they are generally selling at significant discount and are a great value buy and offer lots of versatility and high image quality. It does NOT have phase detect AF capability so it won’t track moving subjects well and it won’t AF on moving subjects well, plus AF is very slow if you are using Four Thirds lenses, but if you can get by with these limitations, then it is a great camera, even better with half of the battery holder grip attached, and unlike the E-M1 this can be removed for even more jacket pocketability.

If you need phase detect AF for sports, Four Thirds lenses, etc, then your only current option is the 2013 camera of the year – the awesome Olympus OMD E-M1 – but it does come at a price.

Other worthwhile camera options to consider are the Panasonic GX7, Olympus E-P5, Olympus E-PL5 and the new very compact Panasonic GM-1, while videographers wil be eagerly looking forward to Panasonic’s new 4K capable camera in 2014 – the Panasonic GH4.

The cheapest new generation Micro Four Thirds camera is the Olympus E-PL5 (note the cheapest current Micro Four Thirds camera, the Olympus E-PM2 is older sensor technology but may still be a great start for beginners moving up from point and shoot cameras)

Unfortunately, for beginners, there is no camera-kit lens kit for under $400 new in Micro Four Thirds, so many end up buying a cheap entry level, often dysfunctional dSLR, which then sends them down the dSLR lens acquisition pathway until they realise that mirrorless cameras are the way of the future – not dSLRs.

Note too that not all mirrorless cameras are great system cameras like the new Micro Four Thirds cameras – I would NOT recommend the Canon EOS-M as it has a limited dedicated lens system and AF is ridiculously inadequate. The older Micro Four Thirds cameras may be worth buying but be aware they have older sensors and image quality and other capabilities are not up there with the latest cameras. The Sony NEX are nice compact cameras but their lenses are far too big and defeat the purpose of a compact system. The Samsung NX system does not seem to be going anywhere fast and is not recommended. The Fuji system is nice but expensive and has limited range of lenses.

Now the all important lenses:

Lenses are a very personal preference and much depends upon how you use the camera and your preferred subjects.

Nevertheless, most people would do well to aim for 3 “essential” lenses:

• Panasonic 20mm f/1.7 pancake lens
  • this has been an all time favorite of many photographers because it is very sharp, very compact, allows your camera to fit into a jacket pocket, is perfect for indoor party shots or walking the street at night for hand held night shots.
  • the unique benefits outweigh the disadvantages of slowish AF, some CA and rather busy bokeh
  • try and pick one up on Ebay 2nd hand if you can
  • note there is a new version (version II) with similar optics but has a metal barrel instead of plastic and thus a touch heavier – for most it will not matter which version you get.
  • if you want faster, more silent AF and don’t mind a bigger lens, then the Olympus mZD 17mm f/1.8 lens is another option.
• Olympus micro ZD 75mm f/1.8 lens
  • this is one of the best lenses ever made in terms of optical qualities
  • it is a short telephoto equivalent to a 150mm f/3.6 in full frame terms and is fantastic for creating shallow depth of field images with beautiful blurred backgrounds thanks to its lovely smooth bokeh
  • this is fantastic for portraits or fashion shots as well as for creating aesthetically beautiful still life images in nature and close up shots
  • this lens gives me almost identical imagery as my Canon EF 135mm f/2L lens does on my Canon 1D Mark III dSLR but in a much more compact size, weight and price, and without the troublesome flare the Canon lens is renown for.
  • unfortunately it is not weatherproof
  • if you can’t afford this, the manual focus Samyang/Rokinon 84mm f/1.4 lens will provide similar shallow DOF with lovely bokeh
• a zoom lens for day time all purpose use
  • my preference here would be the Olympus mZD 12-40mm f/2.8 lens given that it is almost waterproof, has constant f/2.8 aperture so is great for indoor shots and night shots as well as daytime use, has high optical quality and covers 24-80mm in full frame terms – however, as it is a new lens there is a short supply so availability over the next few weeks may be tight, and, like the 75mm lens, it is a bit pricey.
  • a worthwhile alternative is the Panasonic 12-35mm f/2.8 lens, which is also very pricey and not “waterproof”
  • for most people though, any of the other kit zoom lenses will be adequate and far cheaper – just remember they are really only good for daylight hours and not for low light conditions.

Some special lenses that some may need:

• Olympus micro ZD 60mm f/2.8 1:1 macro lens
  • this lens is one of the best macro lenses you can get and is very light, compact with fast AF which all mean it is much more enjoyable to use in the field without a tripod than most other macro systems
• Samyang 7.5mm f/3.5 fisheye lens
  • this is included as it is cheap and has great image quality but remember it is only manual focus, but is a very handy lens to have in the bag.
• Olympus micro ZD 12mm f/2.0 lens
  • if you don’t have a 12-35 or 12-40mm f/2.8 lens, then this f/2.0 lens provides a great wide angle lens for walking around cities at night time without a tripod or for building interiors without a tripod
  • it is also very handy for landscapes and waterfalls

New lenses coming in 2014-2015 which you need to save up for:

• Panasonic 42.5mm f/1.2 lens:
  • this lens at f/1.2 will make a fantastic portrait lens and low light lens but will be expensive
• Olympus 40-150mm f/2.8 lens
  • this is going to be an awesome almost waterproof  lens covering 80-300mm telephoto in 35mm full frame terms, yet compact f/2.8
  • will be great on the E-M1 for sports, even indoor sports
• a 200mm f/2.8 or 300mm f/4 lens
  • it is uncertain which of these will come out if any, but both will be highly sought after lenses given their relatively small form factor.

A flash:

• a flash with bounce capabilities is important for taking aesthetic portraits indoors such as at parties or weddings
• the Olympus FL-600R flash
  • this is my favorite flash as it is not too big (easily stored in the inside pocket of a suit jacket), is easy to use and the 4 AA batteries give it a fast recycle time so you don’t miss shots, and of course it can be used as a master or a slave for remote TTL flash set ups.
  • as a bonus, it does have a LED light for video work although I have never used mine for this.
• if you can’t afford this, then the Olympus FL36R is a good alternative although only having 2 AA batteries means recycle time is much slower and you will be waiting on the flash to get ready for next shot.
• as and adjunct for macro work or as a shadowless fill-in flash, take a look at the Metz mecablitz 15 MS-1 digital Slave Ring flash which will work in remote TTL mode with most camera systems (needs the firmware upgrade to work with Micro Four Thirds)

Filters:

• a polarising filter for each of the lenses is very useful, it allows wider apertures in bright daylight, gives much more colorful images in forest scenes by reducing reflections from leaves, is very handy for water or window shots, and of course can make your sky deeper blue.
• if you do landscapes, then a square or rectangular gradient neutral density filter 0.6ND is very handy to bring out details in the sky instead of having it washed out.