There's no difference in sharpness- the lens is what determines that. The difference is in the speed and accuracy of the auto-focus, especially in lower light. The G2 has faster autofocus, and is able to focus better in dim light than the G1. There are no 'problems' with the 35mm focal length for the G1/G2, but it's just the least excellent lens in a world-leading bunch. The bokeh isn't quite as nice, especially at wide-open/near-wide-open apertures.