What is the specific use of a capsule in E.coli?
According to wikipedia, the capsule contains tightly packed polysaccharides that preform several functions including keeping bacteriophages out, blocking recognition by macrophages, and holding water during dessication. Given the wide diversity of bacteria with capsules, it's probably been around for a long time, which implies it isn't going away any time soon. 

If the capsule prevents the E. coli from being taken up by macrophages, then yes, it could allow the bacteria to harm us more effectively. This is one form of a virulence factor. 

With proper conditions we probably could develop a bacteria with little to no capsule. We have developed L-form bacteria, which don't have peptidoglycan cell walls. It would seem to me that the cell wall is more important than the capsule, but L-form bacteria are very fragile. I don't know what advantage would be gained by producing capsule free bacteria. There would probably be more to gain from making bacteria with different capsules, perhaps carrying proteins that recognize certain substances and produce a signal, allowing the bacteria to be used as a biosensor, or to accumulate toxic compounds for bioremediation.

references: http://en.wikipedia.org/wiki/Bacterial_capsule http://en.wikipedia.org/wiki/L-form_bacteria