The much-praised Olympus OM-10 is currently for sale at a great price, including kit zoom.
(Update: Ken spotted this seems to be the mark 1, not the more current mark 2. I'm not up on the differences, perhaps a mark 2 is worth the $200 premium. I think they are both very good value for money.)
"I’m so glad that I don’t have to choose between performance and portability anymore." (From the article above.)
From our ol' photographer friend EmptySpaces:
"I have had this camera (mark 1) for a year now and love it more all the time. I believe that, other than some reconfiguration of the dials/switches, the big upgrades to the mark ii version ares 5-axis stabilization (vs 3-axis on the original), the addition of a couple custom slots on the dial, and a big upgrade in EVF [electronic view-finder] resolution. Plus some smaller upgrades, too, I'm sure.
Same sensor, same rear screen, same battery life, though. The 3-axis IBIS works awesome."