Like all things, it depends on what you want. If you want smallest and lightest with a proven track record and an excellent warranty, then there's still nothing better. I never fold my Gen2 S2K except to clean it, and I'd gladly give up that feature if it would make it even more light and compact.
The recent Gen2 S2K iron sights were durable enough, but not easy to use for most people. The front sight is actually pretty good, and the rear sight can be modified or upgraded to make it more usable. Since the vast majority probably mount a red dot, it's a non issue for most. You can take the sights off, by the way, and the rifle is even lighter and more slick and compact. Gen2 are still available new, and cheap. Personally, I prefer them to Gen3.
You're right that all the PCC options all have their quirks. Handle them side by side if you can (shooting them is better, obviously). You'll probably know right away which one you prefer. I strongly prefer the KT mostly because of the size, weight and balance, the fact that it has a pretty long history (they've worked the kinks out), and the warranty. Plus, I like KelTec as a company (but I'm not a fanboy, I've tried and passed on some other KT products). But the S2K feels
really light (a turnoff for some), and feels rough around the edges. The Ruger PCC feels solid and well finished, has reasonable iron sights on the basic model, but it's heavy, feels overbuilt (a turnoff for some), and worse still it's nose heavy so it handles poorly IMO, and it feels like an overblown 10/22. The S&W FPC feels nice to handle, balances pretty well, but it has no iron sights, requires M&P magazines (actually much more expensive and harder to find), and requires a magazine spacer sleeve (unless you track down the even harder-to-find M&P compact magazines), has a weirdly fat buttstock and a weirdly long and non adjustable length of pull, the safety is in the wrong location (for me), and probably ties with the HiPoint for looks.
I agree, I didn't expect those changes for Gen3. But I guess it's really for the US market, and they are changes really meant to better compete against the S&W FPC. I think it does that well. In USD, the KelTec MSRP is $499, S&W is $699, and the Ruger is $779. The S&W costs 40% more than the KelTec (and the Ruger is 58% more than KT). Looks like the KT is competing well at its price point, and like most KT product they'll have no problem selling as many as they can produce.
Personally, I would have loved to see a Gen3 that kept the G17 length grip, extend the rail all the way back on the receiver, and LOSE THE FOLDING FEATURE to make it lighter, slimmer, simpler, cheaper, and stronger. But I know I'm in the minority on that one
