My 2 cents.
If canon can nail the Af issue, even if it means reverting to contrast detection only, then they are onto a winner.
They have a market of EF-s and EF users with lenses waiting to be used, a nice solid camera which has the concessions folk already live with when using most compact or compact system type cameras.
I don't see the point of a whole new line of EF-M lenses. ALL CSCs are bulky when they have anything other than a pancake on them, so just go with it. It makes sense to have the 18-55 M as it's most folks walkabout lens. Other than that if you want good reach and a big sensor you need a big camera. When you want a discreet compact camera use the pancake lens.
In the mean time canon could make the pancake lens a real winner by introducing, via firmware, a zone or hyperfocal mode for the pancake. Say 1.5m to infinity at something like f8. No need for slow AF. Just point and shoot and everything in range will be reasonably sharp. It would be a perfect street shooter.
I hear a lot of people choosing 100D/SL1 over EOS-M, for different reasons (better grip, better AF, pop-up flash, viewfinder, longer battery life, etc).