i7 is high-end, i5 is a mainstream performance part. Core i3 (expected end of the year) will be the value part, but it'll still be more powerful than today's Celerons, which will presumably continue in the low-end market as Core2-derived parts for a while yet.
The distinction between ‘i7’ and ‘i5’ is pretty meaningless. The Core i7-8xx range is essentially the same as the current i5 range: it's the same core, released at the same time, with the same socket: not really anything like the previously-available i7-9xx range. The main difference, as you noted, is that the parts marketed as ‘i5’ have Hyper-Threading disabled. This would be an annoying artificial limitation, except that no-one really cares about HT.
I'm sure we can expect more confusing branding nightmares from Intel when we have i3 (and perhaps even i9) to muddy the waters further.
All of these chips are likely to be more powerful than the average developer will ever need!