I'm still sticking to my guns with the 17-85. Seriously, I don't think it's soft at all and have been using it for nearly 2 years. When I talked about the 18-55 previously, I have only tried the 18-55 Non-IS and that is what I thought you lot were discussing so my apoligies. I do think the 18-55 is still too short on it's own as a lens, even for just walking about with, and personally I would rather have the extra reach and slightly softer image quality of the 17-85 IS rather than better image quality and less reach of the 18-55 IS. That's maybe just me though and of course it depends on what you like. I just thought I would throw in my opinion.
True, the IS version is far superior, however I still don't think it is quite the same as the 17-85 for the reasons I have already stated. I've just had a quick browse on ebay and someone is selling one used for £200. Brilliant price and well worth it. Don't be afraid to go for used equipment as long as it's not completely scratched up and beyond repair etc...
Canon EF-S 17-85mm f/4.0-5.6 IS USM Lens | eBay UK
However, you can pick up a new 18-55 IS for a shade less than £100 and it does seem a better choice if you don't want to spend as much. Decisions, decisions!
Please, for your own sake, don't just settle for the 18-55 Non-IS as it really is the pits. I have used it myself, as I said before, and it is awful so really do just go for it if it's a last resort.
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Would you just be investing in one lens or would you want a short range and a zoom? If you were getting two I would stick with Mark's suggestion and go for the 18-55 IS and also probably the 55-250 IS which is a great lens for a shade less than £150. However, if you were only getting one, I would say go for the 17-85 IS as it's worth the money and, with the extra reach, it's a great walk-about lens. It really depends what you are into though. I see you have done a bit of motorsport stuff in the past, so with that in mind, you would be better off getting the two lenses rather than just the one.