Two recent high-end Canon P&S cameras that seem to be popular with the buying audience have hotshoes. The G series of Canons have always had a hotshoe, but the S series hasn't until now.
Compare this to many other manufacturers who have been taking the hotshoes off of anything that isn't a digital SLR. I'm doubly annoyed with Panasonic because even the cameras with a hotshoe don't seem to want to work properly with an ordinary flash (I tested with my dad's Panasonic DMC-FZ50 and couldn't get a non-dedicated flash to work and I'm not sure what I was doing wrong).
But, since I recently purchased a G7 and I keep seeing questions online about what to put in the hotshoe, I figure I can supply some useful details that aren't in the manual after my experimentation.
Canon, of course, wants you to buy a genuine Canon flash, and there are some benefits. You can get one of the E-TTL flashes that Canon sells for quite a bit of money for a seamless, automated, integrated experience. I like to think that I'm smarter than the camera is, so I don't always trust too much automation. I also tend to think that if your style of shooting requires the sort of fast reaction time and flawless image quality that leads one to an E-TTL flash, you probably want a digital SLR because it will focus faster, have less shutter lag, and generally produce better images.
There is another way to do flash photography with the G7 or S5 IS where you will spend less money, get less integration, but get more manual control. For my strobist photography, I already have two 383 Super flashes (although one of the two flashes got dunked in the bay during my recent photographic excursion and I'm going to have to take it apart and see if I can get it to work again since the repair cost is more than the replacement cost), a Sunpak 144PC, a Sunpak digital slave, and a Quantaray MS-1.
I discovered very shortly after getting my G7 just how handy it is to have a 383 Super and my G7 handy. I've been doing a lot of cycling lately, so I used an old belt-mount P&S camera bag to mount the 383 Super on one handlebar and then mounted the G7 in its bag on the other handlebar.
I note that the cost of a Sunpack 383 Super and the cost of the Canon HF-DC1 flash are about the same. They each have their own set of unique downsides. I'm sure the HF-DC1 has advantages and I'll try to point out where it will work properly, but I really don't think that you can do much other than take deer-in-the-headlights pictures of somebody from a little farther away. For certain cameras, most notably the SD series, that don't let you do manual exposure, the HF-DC1 is pretty much the only game in town if you want more flash power.
The HF-DC1 seems to "follow" what the main flash is doing, so it doesn't work when you manually adjust the flash power, shoot in M mode, or use second curtain flash. It also triggers off of other people's flashes. Also, if you are shooting at maximum range, your camera will fire a full flash, which can drain your batteries fairly quickly.
The 383 Super, on the other hand, sits in the hotshoe that you paid extra for and waits for a signal from the camera. Depending on how you have it set, it will either put out a defined amount of power, or sense the correct amount of power for a given aperture and put that out. This means you can't necessarily use Tv mode because the flash doesn't know what your aperture is. But you can still shoot in M or Av mode, first curtain or second curtain. Unless you put an optical slave on the flash, it won't trigger off of other people's flashes.
The 383 super is also significantly more powerful than the HF-DC1, can be easily pointed in other directions to bounce the flash off of a wall or ceiling (this helps you avoid the deer-in-the-headlights look).
E-TTL flashes will integrate fully with the G7 and S5 IS (and many of the prior G-series Canons as well) to act as a seamless extension of the onboard flash. There are, of course, some clone flashes that are designed to work like the E-TTL flashes that Canon makes but for less money, however there are two things to consider. First, unlike many accessories for point and shoot cameras, the flashes will work on a wide variety of Canon cameras so they are likely to retain their value over time like high-end pro gear does. Second, all of the sources I've read seem to indicate that most of the E-TTL compatible flashes from other manufacturers are not 100% compatible with the non-SLR Canons, so if you get one, you want to make sure you can return it if it doesn't work (or just go to a store and test). Really, the minimum flash you'd really want is a used 420EX or a 430EX, which will have the same sort of high power that the 383 has and the ability to bounce the flash, except that you will likely pay at least $100 more.
If you set your camera to Av mode and put the 383 Super on the hotshoe, you should be able to set the ISO and Aperture setting using the sliders on the back of the flash and shoot in reasonable amounts of light. In a darker room, the Av program will tend to set your shutter speed too low, which will tend to mean that you'll get a blurry scene despite the flash, so you will want to switch to M mode, leave the aperture setting where it is, but set the shutter speed to something reasonable. You can use first curtain or second curtain flash. You generally cannot use full auto or Tv mode (or the "Scene" or "Panoramic Stitch Assist" mode) with the 383 super. A real E-TTL flash or the HF-DC1 will work with those situations.
You may discover that you like a little more or a little less flash power, which you can adjust in gross steps by changing the power, or you can move the aperture up or down a few clicks. When I'm outdoors, I usually leave it in Av mode set to f/2.8, ISO 80, and have the 383 set to green, which means that the flash exposure is 1 1/3 stops underexposed... but the regular exposure is about normal, so it fills in the shadows without letting the flash rule the image.
There's a few little quirks to warn you about. There's a switch built into the hotshoe that figures out if you have something mounted there, even a protective dust plug, and Canon tries to minimize one set of surprises... and gives you another set of surprises. If the camera is set to rapid-drive mode or bracketing, it will not trigger the flash and won't warn you that it's not triggering it. It also won't fire the onboard flash. Similarly, if you use the star key to lock your exposure, it will fire an E-TTL flash or the onboard flash, but it won't fire a hotshoe flash.
I also discovered that the G7 (somebody will have to confirm with a S5 IS) will happily synch to the flash at any speed. So you can use the flash at a shutter speed of 1/2500 -- I've tested it.
The G9 is out. The flash compatability should be fairly similar. I did try one of the Sigma flashes that works with the Canon SLRs and it didn't work either.