Saturation adjustment allows you to control the strength of color in the final image. Frankly this has to be the most subtle range of adjustment I've ever seen, especially on a digital SLR. While there is some difference it's hardly enough to even justify having a saturation adjustment option.
Thumbnail
50% crop
-2
0
+2
Sharpness
As you can see from the 100% crops below the DMC-L1's default sharpening (in the Standard preset) is a little conservative, if you prefer using the +1 setting will provide a slightly sharper image straight out of the camera with no obvious sharpening artifacts.