Hands down the M.Zuiko 45mm F1.8 prime lens.
There are higher quality lenses from Olympus...and Panasonic but for the money, the 45mm takes the prize. You could probably pick one up for $100 used from some sucker who doesn't realize the gem they have. I myself owned one for a brief period of time but I've moved on to the M.Zuiko 40-150mm F2.8 Pro lens for my portraiture. I needed the versatility for other kinds of subject matter and this focal length was duplicated on my Fujifilm system.
ISO 200, F7.1, 1/125 (Studio monolight)
It's a 90mm lens in 35mm full-frame terms. Not too long, and not too short. Just enough to get out of the distortion focal lengths and add some compression if you need that.
ISO 200, F1.8, 1/640 (Natural Light)
The focus motor is super fast for moving subjects and dead quiet. Olympus bills labels it "MSC" to indicate that it focuses silently. Perfect if you are shooting in a prohibitive environment or recording video footage.
ISO 640, F2.0, 1/100 (Aux. Speedlite - Bounced off Ceiling)
Even at F1.8 your images will be rendered tack sharp if you hold up your end and hit focus just right. It's only slightly better at F2.8 and I tended to split the difference at F2 for the majority of my work with it. The relatively small sensor size means that under most shooting conditions you really don't need to bother stopping down. You will get a sharp image, descent bokeh and smooth out of focus areas.
ISO 100, F5.6, 1/125 (Studio Monolight)
Color and Contrast are plenty good enough for me and it renders fine details very, very well...think hair, skin texture, fabric etc.
ISO 200, F2.0, 1/125 (Natural Light)
You really have to pony up a lot more money to do better than this lens. Next up is the M.Zuiko 75mm F1.8 which I've found a bit too long for portraits. I like to maintain a minimum intimate distance from my subjects. Indoors this lens is a real handful to work compositions. If you are willing to put up with that, or shoot outdoors it will definitely wow you. I've seen them used for around $400-500. If you aren't loyal, try the Panasonic 42.5mm prime lens. It costs a lot more but worth every cent. I've only shot one on a GH4 so I can't speak as to how it rocks on an Olympus body.
Depends on your perspective. Detractors of the M4/3 format will complain about the depth of field. True enough. The DOF is that of a 45mm lens, not a 90mm. However DOF alone does not make an image and there is plenty you can do to overcome the deficit like place your subject further away from the background.
No weather sealing..again that depends on you. I don't know many photographers who like to shoot in inclement weather (except nature/landscape lovers like me).
Build...ditto. It's not as sexy to my eyes when compared to the 75mm F1.8 or the Panasonic 42.5. Some people may prefer the small size which is exactly what the mirrorless format USED to be all about.
At $100 I'm sure you can make it work just fine for yourself. At that price it can live in your gear bag and you won't miss the money or take up too much space.