To take candid pictures of people, you need a small camera and a fast zoom lens. I tried this the Canon s95 and the Panasonic LX5. These cameras are tops in the P&S arena. The small-and-powerful battle is on, expanding up to full 35mm frame size with the Sony Cyber-shot RX1.
Currently, I use the Nikon v1 to cover my small-and-powerful needs. The autofocus and IQ are superb and offers interchangeable lenses, which for some may add complexity, but for someone like myself who loves this camera, offers the prospect of a whole new format standard.