I'm not sure that I'm able to agree with the consensus of opinion this far.

I don't think that the intended audience of XPE would share the logic that a massive reduction in colour would result in a greyscale image? I don't think that either method of using a slider would necessarily be the best way - so my vote would go with Charles's option {a}.

I would perhaps suggest combining 'Greyscale' with other basic colour alteration schemes in a similar selection that most decent digital cameras offer (I think my Sony P92 offers Greyscale, Sepia, Negative, Black & White, and Solarise)... and add a new button to include these toys.