The kit lens is still pretty good - it is no where near as bad as people say it is. It works best at between f/8 and f/11.
the only real complaint I have is the extremely low quality build, but that does not affect the optical performance, which is acceptable.
All digital cameras require some sharpening. your point and shoot did this automatically. With a DSLR you are supposed to take some control over this - and do it yourself in an image processing program like Photoshop ( CS2 is the 'best but very expensive, Elements is perfectly OK)
If you don't want to do this, if you check your manual, you can go into 'Parameters' and set the camera to apply some in-camera sharpening, contrast etc like you are used to with a point and shoot.
this is what I have done because I cannot be bothered with the computer side of things for every single shot - it's too much trouble. For anything special I shoot in RAW but for ordinary snap shots, large JPEG with parameters applied suits me best.
Incidentally the EF-S 17-85 IS lens is very similar optically to the kit lens - the main advantages are that it has better build quality, image stabilisation and a longer reach.