Throwing myself headlessly into the debate ...
In my opinion, the 17-85 IS is a nice everyday lens. It has a decent build quality, capable of sharp pictures if treated correctly, a wonderfull range, full time manual focus and most importantly; IS. The main drawbacks I find in it is that its not very fast, in some situations it shows a distinct CA and it has a pronounced barrel distortion at 17-20mm. The distortins is rarely something I'm bothered with in my pictures, and the few times I am, its easily fixed in photoshop. People tend to either love this lens, or hate it, just search the forum and you'll find plenty of posts from members of both camps.
If you think IS is important to you (I know it is for me) and you can live with its optical flaws, I'd say this is a good choise. If not, I would look at the faster sigma or tamron equivalents with f2.8. And if budget allows it, the canon EFS 17-55 IS f2.8.
As for the fifty 1.8. Yes, it's built like plastic toy and I was pretty dissapointed when i first got it, but then again I'm spoiled by the metal-barrel lenses of my old konica SLR. However, it takes sharp pictures, it's fast and it is dirt cheep. For taking portraits with a 1.6 crop camera on a budget or taking pictures in low light, it is well worth its price. It wont be leaving my camera bag for any forseeable future.
For lens reviews, you may want to check out eg
http://www.photozone.de/8Reviews/index.html
/andreas