We almost have that camera already... the Pentax Q.
This is now my wife's take-everywhere cam. I think it works well for her as 90% of her shots are candids with family and friends. The 50mm FoV seems to be a good fit for her (width vs distortion).
What is kind of interesting to me with the Q, is how it seems to mostly run wide open (f1.9) and stay down in low ISO ranges, even indoors without the flash. The lens is plenty sharp wide open and, of course, the DoF is adequate to get a small group all in focus (more important for her than a bokeh machine).
So, yes, if there was something that offered better performance in the same size package, I think it would be a good, long-term, upgrade for my wife's Q.