Quote Originally Posted by Photo-John
As for lens vs sensor-based image stabilization - I've been thinking a lot about this. I'm starting to wonder if optical is better. At first it seemed obvious - you make a separate system for each lens with dedicated motors, sensors, and programming and it has to be better. However, after the E-3 intro I started to think about it more. Here are just a couple of things to consider:

1) Camera manufacturers can easily program a camera body to recognize and compensate differently for each specific lens.

2) This is the big one - a camera sensor has much less mass than an SLR lens element. Hence, it should be more energy-efficient and easier to move.
In camera IS is more convenient. That's about the only advantage. From an optics perspective, it's better to have IS in the lens. Moving the right lens element will result, in most cases, in less movement needed for the correction. I don't know what methods are being used to move lens elements, but I suspect it's piezos. If that is the case, piezos typically don't require a lot of electrons to move, and they're very capable of moving extremely heavy things--like, for instance, 6+ meter mirrors--efficiently, things that dwarf camera lenses. From an image quality point of view, I'd definitely want the IS in the lens.