I will present the "quick and dirty" version of my answer, because I could talk on this topic for pages and pages. Essentially the 14mm f/2.5 "pancake" is a prime lens, which means it does not zoom, it has one fixed focal length. So instead of zooming in and out to frame your subject, you have to move your feet along with the camera! The fixed focal length usually comes with a few advantages such as:
- Large apertures that zoom lenses do not have
- Very high quality optics due to easier manufacturing of the single focal length
- Size can be a huge advantage, and only primes can really get the "pancake" form factor
The other option you are looking at is a general purpose zoom lens. The 14-42mm is equivalent to 28-84mm angle of view in the 35mm format, which is handy to know when comparing it to something like your old Olympus XZ-1 6-24mm, which had a 28-112mm 35mm equivalent angle of view. So the easiest way for you to compare the lenses on the two cameras you are considering is probably the following when considering the field of view:
- 14mm "pancake" = 28mm field of view
- 14-42mm = 28-84mm field of view
- 6-24mm = 28-112mm
Someone else will likely chime in and explain how I forgot a few important details when explaining focal length conversions and field of view, but this is the simplest way I can explain it to you that I hope will make sense to a beginner. What is important to understand, is the "field of view", in that, the pancake lens will look just like your current Olympus zoomed all the way out. And the 14-42mm standard zoom will look almost like the Olympus - but will not let you zoom in quite as far.
Other things to consider as you suggested, is the maximum aperture. This is how much light the lens will let into the camera, and is very important. The larger the better. f/2.5 is the maximum the pancake lens will allow, and f/3.5 is the maximum the standard zoom will allow. Your old camera had a maximum of f/1.8 which is larger then both of these Panasonic lenses. Both zoom lenses have variable maximum apertures, so as you zoom in the maximum aperture becomes smaller, which is not a great thing. The prime "pancake" lens has only one maximum aperture since it does not zoom, which is a good thing.
I hope this helps shed a bit of light on what to purchase. In the end the choice between a prime lens and a standard zoom is really up to you, the user. I would say that the majority of people end up with a standard zoom at first, and as a second lens they may choose a prime, but this may not be the correct choice for everyone.