For small-sized sensors, I'm not sure if DiGIC III is a real improvement over DiGIC II. Was doing research and deciding between G7 (DiGIC III) and A640 (DiGIC II) and several reviews seem to agree that DiGIII seems to have more aggressive noise reduction, meaning less noise at the expense of detail. The arguement was that at higher ISOs, the G7 produced cleaner pics but the A640 had more detail.
For such a small sensor, I'm somehow quite doubtful if higher ISOs will be of any use. But one things for sure, the inclusion of a hotshoe really opens up a lot more possibilities for night flash photography!