No picture and lens does not retract

• After pressing the power button in capture mode, the lens would extend and a slight humming from what appeared to be the auto focus motor could be heard for about 5 seconds. When the motor stopped humming, the camera would beep and display E:61:00 in the LCD Screen.
• Camera would extend the lens but not be able to focus on anything past 8 inches or so.
• Zoom in and zoom out would not work.
• Playback mode and the Setup mode was not affected.

To solve this
Put the camera about a half inch from a hard surface.
Let the lense go out and hit the surface and retract a little bit. Let it go out all the way when it tries the next time.
If that doesnt fix it, try this:
Turn it on and let the lense go out fully
See where the lens comes out of the camera? The little round crack that surrounds it? Wiggle the lense a bit and blow in there a bit. (Be sure not to blow on the lense!)

Now turn it off/on again, and it should be fixed

See the following video, It may also help you

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Thanks and Keep using Fixya

Here's a fix I got from Panasonic, I figured I would post this since I haven't seen this anywhere on the web and this post was the highest hit on google

Based on the information that you have provided, we suggest that you perform the following operation:
1. Turn off the camera 2. While off, turn the zoom button fully to the left or right (hold for about 3-5 secs) 3. Release then turn the camera back on... At this point in time the lens should retract. If it does not, repeat the previous steps however, press the zoom to the opposite direction than you did the first time around. If this does not resolve the issue, we recommend the product be sent to our Customer Service Center.

This seems to work for me. The lens retracted back in place and my camera resumed working.