When they first announced this lens I also asked myself (and on forums) "what the hell are they thinking?". In my view, there are other lenses we need more than this one. I also didn't think much of the range, and would have preferred a 24-105mm f/4 (but nobody's asking me and this zoom will never be built until full-frame digital becomes mainstream).
However, last week I found myself in a situation where the 17-70 would have been perfect. I was shooting some construction work for a friend, and was photographing from across the street of the building being worked on. I had to change a number of times between the 18-55mm kit lens (when I wanted a wide shot of the building with people walking by) and a 28-70mm zoom, which I needed to do more detailed work when a window was being taken out or put in. I was cursing at the lens changes when I realised that a 17-70mm is what I needed. Who would've think it!
But back to our scheduled thread: If street price is $450, I think they will sell a lot of these lenses. I think most people would rather have SDM than weather sealing. Think about it, when was the last time you shot in the rain? And when was the last time you shot without focusing? I would much rather see Pentax putting out DA SDM lenses at a good price than DA* lenses with the same IQ but a higher price tag just because they're weather-sealed.
PS: Yes, I know the shoot-at-the-beach crowd will boo me for not wanting weather sealing, but beach crowds are a minority.