MD11Pilot,
The 17-55 focal length was basically designed and built as a general purpose lens for cameras like the XTi that have a smaller sensor (Called a crop sensor. Also known as the APS-C size sensor).
Echoing M38AI comments, many owners with crop cameras, like the XTi, recommend the 17-55 lens as a reasonable everyday, walk-around, lens. At 17mm it's wide enough to be pretty good for landscape photography and other situations that require a wide angle lens. The 50-55mm end is long enough to be good at people/portrait shots (i.e. no distortion of facial features as would occur if you used a wide angle to take a head-and-shoulder picture of someone). This why most crop cameras come with a 17-55 category lens as the kit lens and why all the top lens manufacturers (Canon, Nikon, Tamron, Sigma) sell a lens in this category.
While the 17-55 class is a very common kit lens for crop cameras, most of the kit lens are variable apertures of f/3.5 - 5.6. A constant aperture of f/2.8 makes the lens a much improved choice for shooting indoors and in other low light situations and for creating photographs with considerably more background blur.
$800 seems a fair price for that lens.
As a point of comparison both Tamron and Sigma make competing lenses - the Tamron 17-50 f/2.8 vc and the Sigma 17-50 f/2.8 os - that are both generally rated equal to the Canon lens (some even claim they are better than the Canon lens) at a significantly lower costs. You can get the Tamron new from Amazon for $650 and the Sigma for $670.
Here's my 2cents on the subject.
1. Is 17-55 a focal length you will use often enough to justify the purchase?
2. If yes to 1, then is f2.8 worth the extra cost to you? If yes to 1 but no to 2, then buy a 17-55 with a variable aperture of 3.5-5.6 for about $100
3. If yes to 1 and 2, then is the extra cost of the Canon lens worth it to you over the Tamron or Sigma lens? If yes, buy the Canon. If not, then go for the Tamron or Sigma.