Anyone using one of these and if so what have you found to be an excellent portrait lens for this camera. Also the settings I have read that shooting in raw even at 6mp with this camera is the only way to go. Any thoughts out there?

Can't comment on the body itself, but I've shot quite a bit with DX cameras and can say that for portraiture, I'd strongly recommend the Voigtlander 58/1.4, Sigma 50/1.4 HSM, Zeiss ZF 50/1.4 or Nikkor 50/1.2 AI-S. Pretty much in that order.

I use the S5 as well as the older S3. Lenses first:

Any high quality prime will do. I use a Nikkor 50mm f/1.8, a Nikkor 85mm f/1.8 and a Nikkor 105mm f/1.8 AIS. Focal length depends on situation and taste. If I could afford it, I would probably have bought f/1.4 lenses, but the compactness of the f/1.8 versions is an advantage too. The one I use the most is the 85mm.

Some zooms work well for portraits with this camera too, like the Tamron 28-75mm f/2.8 and Nikkor 35-70mm f/2.8. I have also had some surprisingly good results with an old Nikkor 70-300mm ED, which is a very good lens up to around 150mm. Beyond that, it's not very usable on the Fujis.

Jpegs out of the camera are mostly very good from the Fujis, but to get the maximum out of the files, RAW is recommended. You have enormous headroom for saving blown highlights, sometimes beyond what you would believe possible. If you use high quality lenses, the 12MP jpegs can be very good. There's certainly more information available in the files than from other 6MP cameras.

Here are a few samples:

50mm f/1.8 @ f/2.0