I'm with you on the use of flash - it does stimulate creativity, and it can be used with great effect in portraits. If you can, get one with high speed sync. It really helps with outdoor portraits.
In regards to camera and lens - I used the K-3 with the DA*16-50mm f/2.8 as my main combo for about a year, a couple years ago. I have since switched the K-3 for the K-S2 because I like the output of that sensor a bit more and 20MP vs 24MP to me is not that important (I still shoot regularly with a 10MP camera, the K200D). With the K-S2 I can use ISO 3200 with no problems - whatever noise is there cleans up well as long as I expose properly, and I might also leave the noise there - it's pleasing noise. Plus, the files are - to me - more manageable in terms of how I can push the colors. But I got very pleasing pictures with the K-3 as well, especially with the DA*16-50mm.
Which is why the SMC DA*16-50mm f/2.8 is my recommendation, if you can find one used like I did, that was converted to screwdrive autofocus... I paid about 230 dollars shipped for mine if I recall correctly. It's a totally professional lens, weather sealed. To me it's a perfect all-around lens for what you need:
. The 16mm end is very sharp stopped down a bit which is what you want with wide angle shots anyway. At f5.6-f11 it's bitingly sharp with superb colors and microcontrast.
. The 50mm gives me portraits that are as good and as pleasing as any lens I have, including primes. f/2.8 softens the image a bit in a very pleasing way, from f3.2 to smaller, it's very sharp throughout the lens range.
. Having f2.8 (or a very sharp f/3.2) available at 50mm means you can get high shutter speeds on your cycling shots. It just makes the lens very versatile. And you'll use the 16mm end more than you think you would, in your workshops and events where you have to be close to avoid having people between you and what you're shooting.
. As I said it's professional grade weather sealed
. Most importantly, the images it produces are extremely pleasing and professional looking (I know it's personal, so I'm talking about my experience). The textures in particular, whether it be hair, skin, sand, wood, leaves etc... just have this pleasing and natural quality to them.
- It focuses fairly close, not a macro but it can get quite a bit closer than a 50mm prime would.
The Sigma 17-50mm f/2.8 and the Tamron 17-50mm f/2.8 might be slightly sharper wide open but they don't go to 16mm, they don't have SMC coatings, they don't render nearly as nicely (in my opinion) and most importantly, they're not as ruggedly built, and (most importantly) they're not weather sealed.
I often pair it (or the HD DA 18-50mm f/4-5.6 when I want to go very light and have good light to work with) with the SMC DA 70mm Limited or the SMC-M 100mm f/2.8 - this lens in particular is very affordable and I find it underrated. It's a manual focus lens but it's got - at least my copy does - very good contrast wide open. Which makes it quite easy to get sharp pictures from it even wide open, at medium to longer distances.
Now just find the body that you can afford for it - the K-3, the K-S2 or a K-70 would all pair very nicely and are either in or close to your budget. A KP would give you a bit faster autofocus and better low light shooting, you can probably shoot ISO 6400 with that one with no fear - but it'll cost you a bit more.
Hope that helps.
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