Rather than repeating information, I recommend you read Cambridge In Colour for a clear explanation of the diffraction limit effect. You will see from that article that it is not actually the sensor size that is the important factor, but rather the size of the pixels that make up the sensor. As sensors become smaller so do pixels, in general, but the relationship is not exact.
The following is a chart of many popular cameras, including some for historical interest. After each the sensor size is given along with the diagonal pixel pitch (in micrometers). The chart is ordered from smallest to largest pixels and you will see that this mostly matches up with sensor size. In the final column is the maximum aperture before diffraction starts reducing resolution. The first figure is the actual calculation and the second figure rounds this off to the nearest actual f-stop number (including half and third stops) you can use to avoid diffraction effects.
This number was determined by multiplying the pixel size by 1.054, using the formula provided by Nathan Myhrvold in Luminous Landscape's equivalent lens article.
Update 24 June 2011 Rather than simply use the pixel pitch from DXO Mark I now calculate this from the maximum resolution figures for the given sensor. I have also added the Pentax Q as a lower limit.
--------------CAMERA -SENSOR PIXEL ----APERTURE Pentax Q 1/2.3" 1.53 1.62 1.60 Canon G10 1/1.63" 1.79 1.88 1.80 Canon G9 1/1.63" 1.98 2.09 2.00 Canon G11/S90 1/1.7" 2.04 2.15 2.00 Panasonic LX3 1/1.63" 2.18 2.30 2.20 Panasonic GH2 MFT 3.67 3.87 3.50 Panasonic G3 MFT 3.75 3.96 3.50 Canon 7D APS-CC 4.16 4.39 4.00 Canon 60D APS-CC 4.27 4.50 4.00 Olympus E-P1* MFT 4.29 4.53 4.50 Panasonic G1** MFT 4.31 4.54 4.50 Nikon D7000 APS-C 4.75 5.00 4.80 Pentax K-5 APS-C 4.74 5.00 4.80 Pentax K-7 APS-C 4.99 5.26 5.00 Samsung NX100/10 APS-C 5.02 5.29 5.00 Pentax K20D APS-C 5.03 5.30 5.00 Sony NEX-3/5 APS-C 5.12 5.39 5.00 Nikon D300S APS-C 5.44 5.73 5.60 Pentax K-r APS-C 5.44 5.73 5.60 Sony A700 APS-C 5.50 5.80 5.60 Pentax K-x APS-C 5.48 5.77 5.60 Nikon D90 APS-C 5.48 5.77 5.60 Pentax 645D 645D 5.93 6.25 5.60 Sony A900 35mm 5.95 6.27 5.60 Canon 1Ds Mark III 35mm 6.32 6.66 6.30 Canon 5D Mark II 35mm 6.39 6.74 6.70 Canon 1Ds Mark II 35mm 7.08 7.47 7.10 Canon 5D 35mm 8.07 8.50 8.00 Nikon D3 35mm 8.41 8.86 8.00 Nikon D700 35mm 8.41 8.86 8.00 * also E-PL1, E-PL2, E-P2, E-30 ** also G2, GF1, GF2, GH1, G10The results are quite surprising. Increasing the f-number beyond f/4 on the Olympus E-P1 degrades quality due to diffraction. The Pentax K-x allows f/5.8 and even the Nikon D700 only f/9. The Pentax 645D does more poorly than one might expect, a result of cramming the sensor with megapixels.
One conclusion we can draw is that commonly used zoom lenses on the E-P1, those whose fastest aperture is f/4 or higher, are diffraction limited all of the time! And this is unavoidable, since it is based on an immutable law of physics. Technology improvements cannot help us here!
However, one should not take this to mean that no smaller apertures should ever be used. Obviously one will need to stop down more to gain depth of field in many typical use cases. Realise however the trade-offs in doing so.
Further, this information can be useful in choosing optimal apertures for a lens. Knowing this, I will now try to use the 20/1.7 between f/2 and f/4, where possible.