Well, for $80 the 50mm f/1.8 MKII is a fine lens. No it's not the best glass that Canon makes, but it's pretty clear. Since it's a fixed lens, there's very little chromatic abhoration that occurs - pretty clear throughout the frame. Bokah is decent, but not great. But remember, it's only $80 and it will get you out of a jam in many low light situations because it's an f/1.8. I personally think it's a great lens for the money. But again, remember the crop factor. That 50mm is actually an 80mm on the XT. So it won't work well as a wide (or even a normal) lens. It's a good portrait lens which is what I use it for.
I'm not sure that any of the other EF-S lenses are going to be that much better in terms of quality than the kit lens (zoom lenses anyway). If you want to see a real improvement in picture quality, you need to look at the L series lenses. Perhaps the 17-40 / 4.0L USM would work for you, but it's still $680 (one of the cheaper L lenses). 17mm (27mm on the XTi) would be plenty wide enough. 40mm (64mm XTi) is not much of a zoom though, however for roughly $290 you could get a 2.0 extender.
Another option would be the 28mm/1.8 USM EF lens. It's roughly $400, and would be about the right frame size (45mm on the XTi) for a one-size-fits-all walk around lens. I've not used this lens (or the fore mentioned 17-40 L) so I'm just throwing out ideas. However, I don't think I would limit myself to one lens (especially a fixed length).
I personally have the kit lens and the 50mm 1.8 MKII lens. They are OK to learn on, but after a while you want more. Hopefully I'll be picking up a bigger zoom lens soon (possibly the 70-200m 4.0L).
How much $$$ do you want to spend on the lens?