When I turn my Lumix DMC FZ35 camera on, the lens opens up, but then immediately retracts and then opens again. It does this at least 4 or 5 times before finally retracting for good and the message, "Remove lens cap and press any button" appears on the screen. So apparently the camera mistakenly thinks that the lens caps is on when it isn't.
It sounds like it has slipped a gear in the lens.. you could try to manually push the lens in when it comes out and that might reset it but it also might break it.. best is to send it back to panasonic.. is a easy fix
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