I am thinking it's a missed opportunity, at least the first time around. I don't necessarily have too much issue with going to a smaller sensor - though it's not what I want, it could open up a niche not already filled - below that of the mirrorless SLR style APS-C or M4:3 sensors, and instead being like an upgraded high-end P&S - something to compete with the likes of the LX5 and S95, but with lens-interchangeability and a larger sensor.
However key to that approach for me would be to make the body appreciably smaller, made possible by the much smaller sensor. Instead, the V1 is LARGER than the EP3 and NEX5N, despite having 1/2 or smaller the sensor. That's the part I don't get - it simply didn't need to be that big...unless it was adding a large number of other advantageous features, like a body-driven focus motor, in-body stabilization, or huge battery life (none of which it has). Then you think maybe the lenses will be much smaller - but the kit lens is not even 1/2 inch smaller than the 'huge' NEX kit lens, and the 10-100mm megazoom, which is where the advantage should really become apparent, is actually larger and heavier than the Sony 18-200 megazoom for the NEX...and has less effective reach.
Everything about it so far is a mystery to me...other than that they weren't able to join the M4:3 format (likely Olympus' call since they know Nikon would cannibalize their sales) and didn't want to join APS-C (competition with other established mirrorless systems, and possibly cannibalizing their own DSLR sales).
The fact that it has many of the same criticisms as the NEX did when it debuted (too few lenses, too big lenses, not fast enough lenses, proprietary flash/accessory port, mediocre battery life), it also has a sensor 1/3 the size of the APS-C format...which would seem to give it more handicaps than benefits.