This is terrific news for those of us who "get" the Q (or in my case NOW get it). Up until a few weeks ago, I could not get past the "small sensor" either. Now I see the Q as an indispensable accessory (I also own a K-5 and bought an *istD recently to convert to infrared).
It is a camera that I can have on me AT ALL TIMES. This is why cargo pants pockets were invented.
A small sensor GIVES you some things that larger sensors don't: larger depth of field (nice for "from the hip" street shooting and especially macro) and on the other end it gives you super telephoto with an adapter and the lenses you already have. Every Q owner should have an adapter and a 100mm Macro which gives you great macro working distance and an effective 560mm telephoto on the other end.
It doesn't just have a small sensor. It has a backlit Sony Exmor-R sensor. The image quality WILL surprise you.
It is pure unadulterated FUN.
Complaining about the Q because of its sensor size is like saying that one of the "cons" of the new 560mm lens is that it is large and doesn't do wide angle. Once you start thinking about the Q as an accessory (and not an argument to replace your larger sensor systems) and then you actually give it a TRY, you will realize what you have been missing also. It would also be a powerful system to give to a child that you would like to discover the love of interchangeable lens cameras without breaking the bank.
The best news about this announcement is that lens development and production for the Q should also still be continuing, and not abandoned - as some have feared.
I expect this to have the Ricoh focus peaking feature which would help when using full size lenses on it. If Pentax wants EXISTING Q owners to have more reason to buy full size Pentax lenses for their Q, then they should give the original Q focus peaking with a firmware update, too. And expect another of the new announcements to be the K to Q adapter they showed at CPP+.
A lot of us are also hoping for a fast high quality wide angle Q lens announcement. A 4.3mm f1.7 would be awesome.