I have had this argument in other places, somewhat involving rifles, but mostly pistols, and it is certainly true. I am and have been a proponent of 32's or even a smaller caliber in handguns. Most of the time I get the response, "what can a 32 do that a 357 or 44 cant do better"? DUH??? be small!!! Weigh less. Fit in smaller boxes. Be cheaper to load. Make less noise. Not penetrate as much. It is like asking me what a Ford Ranger will do that a Mack tandem dump wont. Like get better gas mileage, parallel park, is allowed in suburban areas, can pass other vehicles etc.
I noticed in your original post, you never mentioned anything below a 9mm, have you ever stopped to think why??? Because there virtually IS NOTHING, all the way down to a 22LR. People think in terms of two things with handguns, the primary being "self defense" I would suppose. All right, the requirements of a self defense handgun is first, reliability, it must fire first time every time, it must be able to hit something the size of a basketball across an average size room, and it must be of a size and weight that a person would be willing to carry it. Finally, it must do enough damage that a person hit will not just be PO'd. The second has to do with sports and recreation. The first is best served for the average person by a 380/9mm/ 38+P application.
So, what else is there?? Target shooting, hunting, plinking.
A 32 S&W propels a .311 diameter 77gr Lead bullet out of a 4" barrel at 800 fps using 2.5 gr of W231 powder. That is the accuracy load listed in my good ole Lyman cast handbook. The 32 was in fact so accurate that OLYMPIC matches still use it.
Now lets look at a popular,effective, well known hunting round, the 454 Casull. It propels a 325 grain cast bullet @ 1345 fps using 26.5 gr of IMR 4227. Lets compare them. The 454 is a great killer for Whitetails, hogs, even bears. In your suburban neighborhood it could well penetrate every house on your block. It would not be very welcome at an indoor range. The average owner will get to use it maybe two weeks of the year to hunt deer. A small percentage may hunt a hog, and only a microscopic percentage will ever have the opportunity to shoot at anything else.
At 325 gr a pound of lead will make 21 bullets. At 77 gr a pound will make 91 bullets. A pound of powder will load 264 rounds of 454. It will load 2800 rounds of 32 S&W.
A very accurate 32 will kill squirrels, rabbits, birds, snakes, other pests cleanly. The larger diameter works better with less tissue destruction than a hollowpoint in a 22mag. The range is also not a mile and a half like a 22 mag because of the velocity. Not only can it be used in indoor ranges, it could probably be downloaded even more and fired in your basement without notice. It basically provides 22mag + performance in a reloadable package, at half the cost or less than a 22mag, and is way quieter.
SO. Ok, lets hear all those arguments about how big and powerful and effective your handguns are. Because we need one that is NOT so powerful, loud, penetrating, deadly, explosive etc etc.
So yes, we do need another caliber, a handgun smaller than a 357/9mm. Can you imagine where we would be if the riflemen said " we dont need anything smaller than a 338 Win Mag, if a 270 will kill it,imagine how dead it will be with a 338", or shotgunners said "nobody but some wimp would shoot something smaller than a 12 ga. hell, they make 3", and even 2 3/4 shells". And when I want to run rabbits, don't tell me to just get a Rottweiler and cut his legs off at the knees and call him a Beagle.