I don't have a problem with the price, it seems reasonable enough, $5 per character is decent and $20 price point is a great deal.
What I find extremely disappointing in is the actual output.
6 characters at launch only... (even Skullgirls had 8 characters) and no single player story mode.
This is as bare-boned as it comes and makes me feel that this game really should stay in the oven a little longer.
Take Tekken Revolution as a free-to-play example, it has 8 starting characters out of a total of 12 (now 18 after dlc), this is a very reasonable amount of starting characters and makes Killer Instinct's offer of 1 free character feel kind of pathetic.
I feel that MS would earn a lot more kudos if they were a bit more generous with their starting lineup. Say 4 free to play characters with 6 more purchasable to make 10 characters at game launch... but I guess they really wanted this game for the console launch and simply ran out of time.
Right now it simply doesn't feel like a complete game.