Jerobean, I think the wording of your original message might be read to imply that faster glass is the only reason to pay a premium for primes. If so, then I would have to disagree.
While there is a need for speed in many applications, there are many others in which speed is irrelevant. E.g., landscapes, where most of the shooting is done at the other end.
Bigger apertures means bigger price tag, and if you don't need those bigger apertures, it is nice to have quality glass that can be made cheaper at the expense of less light.
Sure, $550 is not inexpensive, but it is relatively inexpensive, as in relative to the 24 mm f/1.4 L II or the 24-70 f/2.8 L (a third and a quarter the price of the first and latter, respectively).
And if you are will to forgo speed, the lenses can be lighter as well. Lighter is good, for hiking, travel, and old bones. Sure, I can go lighter by moving to smaller systems, but this is, frankly, an absurd suggestion (sorry). No, I am not going to dump two decades of investment in a system to start fresh with another system just to go lighter, nor am I going to maintain an investment in two parallel systems just for this reason.
So yes, there definitely is a niche for relatively slower and thus less expensive primes, for the very reasons that I Like Cats points out. Half the weight and price at the cost of 1 stop that I rarely will use? Sounds good to me. It seems to me that Canon applies the same philosophy for zooms: 24-70 f/4 and 70-200 f/4 paralleling the 24-70 f/2.8 and 70-200 f/2.8. And, given the popularity of, e.g. the 70-200 f/4, it also seems to me that this philosophy makes sense to a lot of other folk as well.
With respect to this lens in particular, yes, the IS does seem a little gimmicky for my main projected use of the lens, i.e. landscapes. But I am sure that there are many others who might appreciate this. One use-case, for example, that comes to mind: shooting in museums. Flashes are typically not allowed, and sometimes not even tripods. Not much action, but still objects in dim light. Extrapolate from that to general indoor low-light photography with no flashes and tripods. Rare to extremely contrived situations for some? Sure. But for others, it could easily be the bulk of their photography (I know many people who would find the idea of multiple vacations planned around museum/archaeological sites extremely appealing).