The Olympus C2100UZ (affectionately referred to as the "UZI") was my first camera that had an image-stabilization system. It was an "optical image stabilizer" that moved one of the elements in the lens to compensate for camera shake. For the previous 45-odd years that I had been taking pictures, shooting hand-held at slow shutter speeds was a test of my ability to act as a human tripod.
The Olympus was an revelation. The 10X zoom range of its Canon lens, along with its optical image stabilizer opened new horizons. I was suddenly shooting portraits at 1/2 second hand-held, and using its 10X to grab telephoto shots under available light conditions.
My next camera, a Sony DSC-F707 didn't have this feature, but its bulk helped in holding it steady and its many other features (like NightShot) more than made up for this lack. My next camera, a Minolta A2 had a new type of image stabilizer. Instead of being built into the lens, as with the Olympus, it moved the image sensor itself to compensate for camera movement. This didn't work as well as the optical stabilizer in the Olympus. I've used several of the Sony H-series cameras, which have optical stabilizers, but they weren't very effective.
The DMC-FZ5 was my first Panasonic camera. Tiny, 12 ounces in weight, razor-sharp 12X Leica-designed lens, and an optical image stabilizer that restored my faith in technology. It soon became my favorite camera, the one I carried when I absolutely had to come back with a picture. I was especially impressed with its build quality, solid doors for the battery/SD card and for the USB connector that closed with a reassuring snap.
Panasonic followed this up with several new cameras in this series (FZ7, FZ8), but they didn't seem like a worthwhile upgrade, offering the same lens as the earlier model, and a few incremental features.
Then came the DMC-FZ18, with a new lens, featuring the first wide angle in this series. I'm happy to say that the FZ18's image stabilizer looks like it works even better than the earlier model. This is especially welcome, given the greater reach of its 18X lens.
The image stabilization system in the Panasonic cameras can operate in two different modes. As is always the case with photography, there are tradeoffs with either mode.
In Mode 1, the stabilizer is always on, which can hold the image in the viewfinder steadier while composing a shot at the longest telephoto focal lengths.
In Mode 2, the stabilizer is only on when the shutter button is pressed and has a stronger stabilizing effect.
Which one to use? Try 'em both and see which works best for you.
Additional note: although the Panasonic DMC-FZ18 allows you to set the mode for the image stabilizer in P (Program), A (Aperture-Preferred), S (Shutter Preferred), and M (Manual) modes, other settings of the mode dial on top of the camera may force the stabilizer to mode 1. These are simplified settings and the designers probably felt that new users would be more comfortable see less movement in the viewfinder.