keep in mind the differences beyond image quality.
the control layout is a bit different. i tried a friends k200 adter shooting for a few months with my beloved k10 and realized that i really like having 2 control dials. also theres a lot more controls on the back of the k20 and a lcd on the top
(courtesy of dpreview.com)
the k20 has full weather sealing, the k-m does not
k20 has an 11 point autofocus, k-m has 5 point
k20 has expanded 6400 iso, k-m has 3200
the k20 has a burst mode at a lowered resolution, but otherwise the fps is very similar
the km is WAY smaller than the k20
overall the k-m is a different camera intended for different audiences
and it might just be me, but i upgraded to a dslr from my canon s3is for more control over my images (as well as better iq, but that goes without saying) and i hate having scene modes on the dial, id much rather learn why the camera might make the decision it would for the scene, and be able to do it better myself. the camera will choose what it thinks is the best settings but i might not agree. it just kind of irks me since id never use them and using full manual mode with my old mf lenses was one of the main things that made me decide to stick with pentax when i was thinking about canikon cameras, and i truly do not regret it for a second. well, the 85 1.2 would be sweet but i could never afford that anyway so what difference does it make