I think the XS had two purposes: (1) to be as thin as possible, offsetting the K-01 being thicker than other mirrorless cameras (none of which use a legacy lens mount); and (2) to be 'stylish' (in Marc Newson terms). Both of these are lost on those of us who were going to stick other glass on it anyway.
Based on patents registered when the K-01 first came out, Pentax was looking at an XS snub zoom that would have taken advantage of the lack of a mirror and stuck further into the body, but it doesn't sound like that is going to happen.
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