Panasonic ZS1 has a 10.0MP 1/2.5-inch (5.744 x 4.308 mm ) sized CCD sensor . On the other hand, Olympus VG-160 has a 14.0MP 1/2.3-inch (6.17 x 4.55 mm ) sized CCD sensor .
Below you can see the ZS1 and VG-160 sensor size comparison.
As seen above, Olympus VG-160 has a 1.1x Larger sensor area than Panasonic ZS1. Larger sensors give photographer more control on the depth of field and blurry background compared to smaller sensor when shot in same focal length and aperture.