Having seen the announcement on the Nikon 1 AW1, I think Nikon has a great addition to their insipid mirror-less system.
By itself, I find that the Nikon 1 system is good in a purse. It fits and it has reasonable quality, but it's very expensive for what it is. Now, for a family's ability to photograph each other in the swimming pool, the AW1 is a huge step above the typical waterproof (or water-resistant) point-and-shoot camera.
I wouldn't expect Jacques Cousteau's crew to use this camera but I'm sure that they would have appreciated the weight reduction, and everyone could have strapped one to their belt, giving more flexibility in their ability to show ocean life to the world.
Now, cynical me asks "When do we hear the first report of someone changing lenses underwater?" because it will happen.
How many people have dust on their sensor because they dismounted the lens and flipped the mirror out of the way because they thought that there was dust on the sensor, only to find that the lens was dirty?
The only real trouble with the Nikon 1 system is the price for the capabilities. Even Canon had to make radical changes when few people saw value in the EOS-M. The AW1 will help Nikon, I'm sure, although I think nothing will persuade the "Full Frame" fanatics to buy something with a sensor that small. At US$799.99 with the 11-27.5mm lens, it doesn't seem a horrible deal, but it's certainly a big step from the point-and-shoot cameras at US$300-$350.