Since the latest "balance" for unarmed combat, it is no longer a viable form of combat unless you're fighting naked people who aren't carrying weapons. We did a lot of combat testing prior to the "balancing" of it, and we did agree it was a little too powerful. Now, however, it is completely useless.
I recommend doing one of two things:
1. Remove it as a skill from the game.
2. Give us unarmed weapons like spiked, metal, or blade gauntlets and increase the damage a little bit.
Additionally, it is possible that unarmed combat is balanced with other weapon types, but that the lame preorder weapons are throwing everything out of whack.