In his article about switching from the Canon 5D Mark II to the Sony NEX-FS100, Paul Antico at Need Creative says of the kit lens:
7) Its 18-200 F3.6-6.3 kit lens absolutely sucks and should be avoided (thankfully, you can order it without one) But is it that bad?
At B & H's site, 43 reviews give it an average of 4.6 out of 5 stars. That's not a bad rating, though many of these people are using it for stills, and the most common complaint noted is how large and heavy it is. Of course this feeling of size would be exacerbated when you put it on a tiny camera like the NEX-5. Still, the "Most Liked Negative Review" says:
This lens features very good build quality and good optics. It is worlds better than the other two currently available E-Mount lens from Sony. This lens lives up to the excellent sensor in the NEX-3/5.
Back in October I got to play briefly with the Sony NEX-VG10, which comes with the same lens, and had this to say about it:
The first thing that surprised me was how stiff the zoom lens is. I was expecting it to be a bit stiff; maybe like the Canon zoom lens I have on my HDDSLR, but it's much worse than that. Really unusable to zoom while shooting. Sure, using the zoom in narrative work is discouraged, but in documentary and other forms you often use a zoom now and again. Not everyone has had the same experience though, and maybe I was being overly picky; or maybe it was a bad sample, or maybe it improves over time as you use it... Still, I've seen others complain about how stiff it is.
Over at Luminous Landscape, they reviewed the NEX-VG10, and had this to say about the lens:
This lens is quite excellent. [...] What I saw during my three days of field testing was excellent resolution and high contrast combined with a low level of aberration.
The lens is mechanically very smooth, with fly-by-wire focusing and mechanical zooming. The zoom is reasonably smooth, but can't really compare with a motorized zoom, and thus the lens should really be regarded as variable focal length rather than one to be used for zooming while filming. No big loss.
The real story on this lens, particularly for video shooting, is the built-in Active Stabilization. 
Den Lennie, in an online chat about the NEX-FS100 said:
It's a solid piece of glass with a metal housing, very nice optical quality and resolving power. For shooting outdoors it’s a very good lens. Only f3.5 though, so indoors a little slow, but we used a Alpha 50mm f1.4 for the majority of "Vertigo," and the 16mm f2.8 Sony E mount - the 50mm f1.4 was under £400. Not exactly shouting from the roof-tops, but not totally dismissive, either.
And Photcine.de reviewed the lens (on an NEX-5) and found:
The optical quality is on a very decent level. It is not a flawless lens, of course, but the resolution figures are very fine in the lower portion of the zoom range and still good beyond. The distortion characteristic is about average for a lens in this class. The Sony lens produces a surprisingly low amount of vignetting even at "large" aperture settings (even in RAW images). The primary weakness of the lens are the lateral CAs at 18mm and 200mm although that's also rather typical for such lenses. 
It's true that most people don't like how slow it is (f/3.5 at it's widest, f/6.3 at it's worst.) This is the most often cited criticism in user reviews of the lens and camera on different web sites.
The other thing not mentioned that I personally don't like about it is how long it gets when zoomed - it really extends out of it's tube!
But if not that lens, then what do you get? There's very few E-mount lenses available, so your best bet seems to be to use the Sony NEX-Alpha mount adapter - which costs $149 - and use Sony Alpha lenses, or get a Nikon to E-mount adapter and buy Nikon mount lenses.
Philip Johnston clearly has this in mind for his FS100, and has ordered a Nikon 17-55mm f/2.8 lens which costs $1,500; more than twice the price of the Sony lens, and 1/4 of the focal length range. Still, I bet it's a nice lens.
I decided to plum for the Nikon 17-55 F2.8 DX zoom lens as my standard lens on the AF101 which gives a crop equivalent to a 34-110 lens and the new Sony FS100, once again the Sony Super 35mm chip is almost the same size of the APS-C sensor so your choice is so much bigger. Don't forget, for the Nikon lenses you'll need an adapter like one of these:
- Novoflex Adapter for Nikon Lens to Sony NEX Camera [$282.99]
- MTF Services Ltd Nikon G to Sony E Mount Adaptor [$375.95]
If you don't like the price of that lens, these seem to be the cheapest alternatives:
- Tamron 28-75mm f/2.8 XR Di LD Aspherical (IF) Autofocus Lens for Nikon SLR [$499.00]
- Tamron 70-200mm f/2.8 Di LD (IF) Macro AF Lens for Nikon AF [$769]
- Sigma 70-200mm f/2.8 II EX DG APO Macro HSM AF Lens for Nikon [$949.00]
When you look at the choices, the Sony kit lens starts to look better. Why not buy that as a general purpose lens, and then get a couple of fixed focal length lenses like Den Lennie did?
For outdoor shooting and ENG shooting, it isn't a bad lens. Ultimately, whether this lens is good for you depends on the type of shooting you do. Even if Sony isn't over-charging for the lens, if you're never going to use it, that's $600 you can put towards a lens you want.
BUT the kit lens covers a wide range of focal lengths, it doesn't require an adapter, and it supports optical image stabilization. For those three reasons, and for the kind of shooting I do, I'd buy the kit version of the NEX-FS100 with the lens.
- NeedCreative: Good-Bye HDSLR For Me! Sort Of. A Look At The Sony NEX-FS100
- NotesOnVideo: Sony NEX-VG10 in the flesh
- LuminousLandscape: Sony NEX VG10 HD Camcorder / 14MP Stills Camera Field Report
- NotesOnVideo: Sony Chat on the NEX-FS100
- Photocine.de: Sony E 18-200mm f/3.5-6.3 OSS (Sony NEX) - Review / Lens Test Report
- HDWarrior: Lenses Revisited “Your options are limited being a Canon owner”