Nothing wrong with butt ugly. This is a case of form follows function, and I think it's truly a great functioning gun. I don't take it for anything other than what it is: a very good pocket pistol chambered for an effective round. It's meant for concealed self-defense carry, so it doesn't need to be pretty - just reliable. I wouldn't care if it looked like a Japanese Nambu, as long as it works. And it does.
I think that part of the problem the critics have with it is the price and who makes it. It's a gun that runs less than $350, and it's made by a company that started out making parts for NASA. No doubt they go around sniffing "Well, it's not a proper gun." Then comes the real rub - it works, and works very well. To follow that out to it's logical conclusion, I think a bunch of gun snobs are feeling uncomfortable because they spent much more on a gun that is actually no better.
Take a Glock. $600ish. The only real "refinement" made in years is the ergonomics on the polymer half of the gun. The "Baby Glocks" are merely refinement on size. If you don't mind strapping on a brick or you're into competition shooting, then it might be the way to go. If you just can't bring yourself to pack a .380, then it might be the way to go. Still, $600ish for a pistol that is half polymer? I doubt it costs anywhere near that much to manufacture it, and they sure haven't sunk much money into R&D because the only real change is cosmetic. Maybe the "Baby" versions might warrant some of that price because cutting down a pistol to subcompact size involves a lot more than just taking a saw to it. At lot of work went into that, but it's still not really a pocket pistol. So, what it boils down to is paying for the Glock name. Not to take away from Glock, because it's a fine weapon - but $600ish? Really? It's half polymer, and even Glock's polymer is not superior to that used by Keltec.
You really can't pocket carry a "Baby Glock" You can IWB carry it, but then you really have to modify how you dress and worry about whether the wind will blow open your shirt, or worry that somehow your shirt will snag open and scare the life out of the mall moms. Really discrete concealed carry leaves either an ankle holster or pocket carry, and just try to rapidly access that ankle holster when seconds count.
I don't think most gun owners are really "gun nuts." They're often working stiffs who don't have $600 to $1K+ to lay out on a gun, and generally they don't want to have to strap on seven pounds or more worth of hardware just to do yard work or go to the grocery store. They often don't much care to debate the finer points of ballistics, so they want a round that is generally accepted to be an adequate self defense round. They don't care much about anything other than the gun being reliable, effective, and easy to operate and carry. (Hey, I just described myself). For the longest time, this probably meant a snubby, a Seacamp, or a Colt Mustang. If you're a big guy like me, this also could have included a Bersa, Walther, Sig P230/232, or a Makarov. For me, this was the snubby and Bersa.
Then comes Keltec, using space program technology to finally make a pistol that is reliable, affordable for the average Joe, is chambered for an acceptable round, and is truly capable of being pocket carried without a distinct print. It might have been copied over the years, but having fired both the Ruger and Kahr offerings, I can say that it has not been out-done. (I can't speak for the DB or Hellcat products, or any of the other products put out during the "Mouse Gun Wars"
Now that concealed carry is legal in most states you have many people flocking to buy a gun. Considering that most of these people are not "gun nuts" and most are simply looking for a reliable concealed carry weapon, it's no wonder that they flock to a weapon like a Keltec. The gun snobs will continue to sniff about it because most of these people will appreciate their Kimbers, Wilsons, Glocks, and Sigs as wonderful guns - but nothing to be worshiped. To make matters worse, these new comers and their "Kelcraps" (to use the common slur) will be just a well and reliably armed. The only problem I have with a good many Keltec owners is that they don't put in the range time like they should. This could be said about owners of other guns, but the problem is still serious - "spray and pray" can get a lot of bystanders killed or seriously injured, and six rounds of indiscriminately dispensed .380 rounds is a very bad thing.
I bought my P3AT knowing exactly what I was getting, both in terms of strength and weakness. I refuse to be held hostage to paranoid fears of crack-fueled zombies or hordes of sex offenders, and I really don't want to have to strap on a full-sized 1911 and spare magazines. I don't chase after the newest wonder guns or ammo. I don't need a frame made from unobtanium, and I don't want a rail with which to load-up gizmos like photon torpedo tubes or flame throwers. My social circles are pretty tame, and my biggest threat is a random meth-monkey looking to make some quick cash or a disgruntled probationer or parolee looking for easy payback. I just want an effective and reliable gun that I can drop down a front pants pocket and go ab out my bidnis. For the longest time that was my Taurus Model 85 or Bersa Thunder, but now its the P3AT (especially since .380 ammo supplies are on the increase). The other two are very good, but none offer the advantage of P3AT.