The replacement for the ZS3 is called the ZS7. (I haven't heard anything about a ZS5. Assuming it exists, perhaps it is an intermediate model that lacks some of the bells and whistles of the ZS7.)
Based on reviews and sample images available so far, many people have concluded that the ZS3 has superior image quality to the ZS7 in certain respects. It probably would be a good idea to do some research on that issue and come to your own conclusion about that and whether the ZS7 is worth the extra cost over the heavily discounted ZS3 or not.
I have the ZS3 and really like it, especially outdoors. The shutter button (or any button) placement on that model is not a problem or issue for me but ymmv.
Since you can return a camera to Costco for up to 90 days for any reason regardless of whether you have opened and used it, if I were you, I would give the ZS3 a try for a while before making a final decision.
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Peter