That's a really tough call. Both are fine cameras. Hard to properly "weight" the price differential vs. extra features, as only you can determine this. I can attest to the picture quality for the FZ-1 but it does have a weak flash (which I have compensated by buying a digital slave flash...)and no autofocus assist light, which can sometimes be an issue. FZ-1 owners seem mostly satisfied with it, and don't seem to feel compelled to upgrade. FZ3 owners seem to love their camera too. I mostly print 5X7's with the FZ-1 these days, and have some terrific 8X10's too.
How's that for a long "non-answer"?