Yes, pistols are quite weak. On sniper builds though, they are mostly used not for direct damage, because they require quite an investment to be effective and if you are a sniper, shooting 2 times in a round from your spearhead or dragunov is way better than using your pistol in 95% of the cases. They are used for their utility of +7 initiative. Combine them with Paranoia (+5 init) and decent Agi and Dex (like around 6-7 each) and you've got yourself a build that will almost always get a first turn even if you are caught unaware.
If you want sidearm that you would actually use in a fight, SMG is a way to go, you need only two feats - Spec Ops and Commando for it to be effective, point blank burst or two from 8.6 caliber smg with smart module and smart goggles will decimate most of the enemies that would manage to get close to you. SMG also has stealth potential, due to being craftable with silencer. Since you are not dedicated SMG build, you will be able to kill 1, maybe 2 enemies in one round with silenced SMG, but still it's a pretty good deal.
You can also use both, since it will require you to take only 4 feats (Gunslinger, Paranoia, Spec Ops, Commando) and sniper build are least feat starved builds in the game, because you yourself only need 4 feats to be a very effective sniper (Critical power, Aimed Shot, Snipe, Sharpshooter). When you fight in the Arena, storm Black Crawlers base or any other situation where you can't start combat on your terms, equip a pistol, otherwise use SMG.
It's the build that i finished game on Hard with and got halfway in Dominating (not because i couldn't, just didn't want to continue, since it was pretty clear that the build is more than capable of doing so). And it's probably one of the easiest build to play
P.S. Psi Empathy is a total waste on your build. You got your health reduced for almost nothing.