I don't buy the "no market" statement for an EF-S normal prime. Whilst this is obviously Canon's belief, or they would have already produced one (crop frame sensors have been out for a decade), the fact that virtually every other manufacturer makes one should be a give away (unless there is something different about Canon shooters). By many accounts the Nikkor 35mm AF-S DX 35mm f/1.8 G sold very well when it was first released and I think it is still a very attractive lens.
Think of it in another way, how many rebel owners buy the EF 50mm f/1.8? Whilst this has a function as a portrait lens, many users complain that it is too long for indoor use. Surely an equivalent in the 28-35mm range would therefore sell equally as well? How is it that Nikon can produce such a lens (complete with an ultrasonic motor) for not much more than the kit lens and less than the inferior Canon EF 35mm f/2?
The availability of this lens and the even better Nikkor 50mm f/1.4G (sharper and without the fragility of the equivalent EF 50mm f/1.4) is what tempts me to switch brands far more than any body does. I'm sure that the 35L and 50L are excellent, but they cost more than a brand switch and are both relatively big and heavy.
Canon are ignoring the middle of the market at their peril. The "average rebel buyer" that Neuroanatomist describes is also the kind of buyer who is happy with just the kit lens (or maybe just adds the EF-S 55-250mm). The rapid growth that has characterised the lower end of the market is starting to slow with both market saturation and the emergence of the mirrorless alternatives. Future growth is most likely to come from the middle, the very people that Canon seems to have stopped making lenses for! How many mid-market lenses have they released in the last three years? I can think of only one, the EF-S 15-85mm (two if you count the better-late-than-never and under-specced 18-200mm).