If you have one of these magic little cameras then you will find they are very capable. The M1 has a slightly better sensor than the A1, but the A1 takes better movie shots. In practice I have not been able to tell much difference between the photo quality and even the master Rico Pfirstinger seemed to find the same. His expert corner compares the cameras and gives some great tips as well: http://ht.ly/yxlsQ
In terms of initial setup here are my suggestions and a little bit on why:
DATE and TIME
Set date and time to your local time and use the time shift function when you travel - that way you can keep it synced with your smartphone and this enables you to easily merge photos. Speaking of phones you can use the GPS feature on the phone to send that information to your camera to ensure it knows the location and puts them onto the camera. To be honest I don't use this feature, but you should know the camera supports it. You have to do this every three hours however so be aware of that.
ISO MODE and DYNAMIC CONTRAST
I prefer to have this set to AutoISO with max set to 3200 and min set to 400 with min shutter speed set to 1/125. Although the ISO can be set to 6400 I have found I get some noticeable noise so I set it to 3200. I leave the minimum setting at 400 to give some headroom for the dynamic contrast setting. I set the minimum speed to 1/125 and would much prefer this to be 1/500 like it is on the bigger brother X-E1. But alas that's all we are offered. These settings work pretty well for street shooting where you might be walking in and out of shadows and still want to capture pretty sharp images of people as you walk along. Rico has a great blog explaining more on using AutoISO here: http://ht.ly/yxleb
I set Dynamic Contrast set to Auto. Sometimes this doesn't give enough of an ability for the camera to capture all the shadows and detail in the sky (e.g. the sky will be a washed out white) - if this happens try pressing the Q button for quick access to the key settings and then toggle across to Dynamic Contrast and use the back knurled knob to set it to 400%. Don't forget to set back to Auto after you take the shot to give the camera maximum ability to help you out.
Pro and semi pro photographers please tune out now! OK - it's true: I tend to set the film set to JPG only mode when I travel for holidays. A key reason is that it means I can transfer small files to the iPad and for sharing with other people. I do use RAW a lot when I am back at home base. Look, this is a very personal thing. There is NO doubt that RAW gives you the best possible picture quality and flexibility. But for most people it's too complicated to buy and use Lightroom or Silkypics and this blog is essentially for the newcomer. So forgive me, but I'm going to suggest JPEG mode. And of course let's remember that shooting in any of the camera scene modes (which the novice will do) will ONLY give you JPEG images in any case. But I don't want a flame around this: RAW is definitely better, but the Fujifilm cameras do an AMAZING job of processing the images to great JPEG images inside the camera. So I use JPEG mode a lot.
I set the film emulation set to 'S' rather than STD. Here's why: A major benefit of the Fujifilm cameras is their glorious colour shots and their terrific white colour balancing. But this takes a bit of understanding. Here we go: the standard JPEG 'film' mode on the Fuji is called PROVIA and partly emulates one of their famous early films that was called PROVIA. On these little cameras however, it's not called Provia but is just called STD for standard. It's great for buildings and standard shots of objects.
However If you like taking photos of kids and people which I expect you will do a fair bit, then it's a bit bland and the images lack punch (they can be fixed later to enhance them but let's try and get the initial images to how you would like). If you wish to improve things then I suggest you switch to ASTIA film mode which on these Fujifilm cameras is confusingly called S (for Soft). This mode takes wonderful images of people.
The third film mode I use a lot on these cameras is called VELVIA and you set it with the 'V" film setting. I used to use this film a lot when I was young - it takes quite vivid greens and is fab for punching up the colours of greenery and reds.
So it comes down to this. I tend to just shoot in ASTIA (S) mode all the time now because I like to take people shots and it's great for that. Also good for blue skies. And the colours of greenery can be punched up later in photoshop or equivalent but usually you don't need to.
There are two other film modes (B&W and Sepia). Pretty obvious what they do.