I read through this and can't help but notice the people disagreeing with this concept or suggesting the use of a smaller caliber sub guns. The PDWs are marketed and designed for PSD type ops. If I'm in a vehicle and we get disabled, I want my weapon up and be out of their as quick as possible...an m4 is too cumbersome to allow that. Not too mention being able to conceal it if we are on foot or you are posted somewhere and trying to be discreet.
Now, why not use a MP5 or some other sub gun? Because now you have the ability to get rifle caliber ballistics and range in something small and easily concealable. Other than "noise" and felt recoil there really isn't a drawback. The bolt carrier itself is modified to act as the buffer so to speak, so it isn't an egregious amount of recoil. They redesigned it to compensate for its shortness.
Now with that being said, 5.56 wouldn't be my first choice either. The ill fated "honey badger" would make the most sense. A round (300blk) that is designed to work well in short barrels and offers reduced chance of over penetration yet plenty of ooomph at close range. Not to mention the ability to suppress without having to adjust anything (not sure how 416 works but we have to adjust piston on our M6's if we add the can). If I recall AAC were the ones to really pioneer this design...