that case not suitable for LX3 at all   i think u should looking for another one...

Moving subjects are always hard to capture.
Puppies run around too much so u have not much choice but to either flash em, or use a fast shutter speed to freeze the action. But of all times, u pick night time to photograph ur puppy....which requires:
  1) the biggest aperture on ur LX3 = f/2.0
  2) raising ur ISO settings (introduces noise)

Suggestions:
1) photograph em during the day.
2) provide ample external lighting at night so that u can use slower shutter speeds.

I personally don't like flashing my subjects.
Makes em too bright.
Therefore the reason for the 2 suggestions i gave above.

Just my 2 cents 
PS: your puppy's face is out of focus.

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Added on September 6, 2008, 12:05 amKing of king's doing HDR!!
hahaha....

please post the shutter and aperture thanx

is tis camera worthwhile buying?
got tis orthodox thinking bout panasonic n cameras..
despite using Leica 2.0 lens...

F2.8
1/160sec
ISO80

I am not sure why u r not satisfied with LX3's bokeh la. 
Bokeh depends on 3 very important things:
1) The aperture (a bigger aperture i.e. f/2.0 gives you more bokeh).
2) The focus area (where or which subject area u are focusing esp during auto focus)
3) A bigger zoom might help

You need loads of practice to get the right bokeh.
I have used a EOS 400D before, and believe me, it is not so easy even with a DSLR if you don't have the right concepts and settings. 
Try to search online for bokeh tutorials.
One good way to practice bokeh is to use a long ruler.

My advice for you, to avoid disappointment when u really do swap for a DSLR....
is to borrow a DSLR from a fren for a few days and practice your bokeh with it.
You might not find it that easy if you have no idea what aperture, shutter, manual focus, etc does to your photos.

Share some of my better bokeh style photos with everyone.
Just to let you know how much bokeh you can get with the LX3 with what settings. 



Aperture - f/4.0
Shutter - 1/800
ISO - 80
Focus - Auto



Aperture - f/2.6
Shutter - 1/20
ISO - 400
Focus - Auto



Aperture - f/2.0
Shutter - 1/30
ISO - 200
Focus - Manual
In case you do plan on letting go of your LX3, let me know the price.
Maybe I can help you to find a potential buyer 

PS: All the photos above are UNEDITED, except for the little signature at the bottom