The codec is the AVCHD at 17mpbs, which is significantly less than the H.264 Canon codec, which is 35-40mbps. Still with 720 at 50/60p, you can get up to 1/2.4 slow motion at 25fps. Best of all there's no limit to recording time unlike Canon's 12 minute and Nikon's 4 minute clip limits.
Being a 4/3 mount, the sensor is smaller than the sensors of Canon and Nikon. However, the sensor is still bigger than many video cameras, especially the consumer camcorders. With a bigger sensor than all consumer camcorders and many professional HD cameras, real manual controls and slow motion ability, the Panasonic GH1 promises to be a serious performer as a ViDSLR for underwater use.
If more lenses supports the HD function (presently only the 14-140 f4-5.8 does), this platform will force Canon and Nikon to take the video market seriously. Personally I think the 720p is the key feature on this camera.
Now housing manufacturers have yet another camera to think about. Best of all, the Gh1 comes in flashy red and bling gold as well!

http://panasonic.net.../gh1/index.html
Here is Phil Bloom's quick and dirty first shots with the GH1:
Bloom Test