I believe that the 5.7 X 28 was designed to replace the standard issue sidearm but not to replace a full sized rifle. Correct me if I'm wrong but the idea was to issue the P90 to troops as a more effective self defense weapon than a pistol. In that respect I think it's a much better option. 50 rounds, shoulder fired, much more effective range, armor piercing. Heck yeah I'd trade in my 9mm for one.
So 5.7 for military? Sure. In the approriate role.
And let me say, I've got an FN 5.7 pistol and a PS90 carbine. Even if we're talking about the pistol it's a heck of a shooter. The nearly total lack of recoil makes it uber control-able, it's very accurate, and long strings of follow up shots into small groups are very easy. Although the civilian ammo is ballistic tipped the military stuff is FMJ and designed to tumble on impact. If it acts as advertised the wounds should be pretty severe, at least as damaging as a 9mm. If that's the case then even the pistol is worth using by the military.