There is an interesting series of blog posts at the Bible Gateway called "Perspectives in Translation". Here is the assignment on translating Romans 1:17 and the summary of the responses.
If any Bible passage could be credited for igniting the Protestant Reformation, it’s Romans 1:17. Yet as Luther understood so well, this one verse could inspire a thousand scholarly monographs.
Michael Bird addresses four areas that need to be addressed in rendering a translation for this verse. These include translating dikaiosynē theou (righteousness of God) and ek piesteōs eis pistin (from faith to faith) as well as how to handle textual variants of Habakkuk 2:4. See the end of this post for his translation.
Robert Yarbrough gives five different issues that must be dealt with in translating this verse. He then asks the question which existing translation does the best job. He favors the WEB as the most accurate and defines the term accurate:
as “when the form and substance of the original is rendered as faithfully as possible into another language.”
Douglas J. Moo recommends readers check out his commentary for details on the issues regarding translating this verse. He suggests that "more literal renderings" may not be as easy for the average reader of Scriptures to understand. Translations should focus on communicating to this type of reader. He also questions the idea of "literal" renderings.
We know that there are, in fact, no “literal” equivalents: Perhaps never do the semantic ranges of our Greek, Hebrew, and Aramaic words exactly match the semantic range of English words. And the same pertains to syntactical features. ... But laypeople, in particular, are badly misled by our language of “literal,” as if “literal” = accurate. It just ain’t so.
Denny Burk prefers the NIV 2011 translation. He disagrees with Moo regarding "literal renderings" and offers this definition:
[a] literal equivalent is not simply substituting form for form—a noun for a noun, a verb for a verb, a participle for a participle, etc.—though sometimes literal includes such substitutions. A literal equivalent is also one that translates a donor form with a receptor form that has a semantic range with as much overlap as possible with the donor form.
I enjoyed reading through each of the replies, however - in my opinion - they were a bit too short (at least for me) to adequately understand and assess the translation issues for this verse. It did prompt me to do some more reading and I recommend checking out Moo's commentary as well as NET Bible study notes for this verse.
In terms of translation goals, I think Moo is right in noting that translations need to be understood by the average reader of the Bible, however I really like Burk's assessment of literal renderings - they should leave as much interpretation out of the translation as possible and allow for the variant interpretations that the original language allowed for. This question is dealt with more directly by various scholars here. Ray Van Neste says it this way:
The goal of a translation is not to decide the interpretive issue in each case. Rather it is to accurately communicate the original with its ambiguity as much as possible.
Here are a sampling of renderings from several major translations:
For in it the righteousness of God is revealed from faith for faith, as it is written, "The righteous shall live by faith."
For in it the righteousness of God is revealed from faith to faith; as it is written, "BUT THE RIGHTEOUS man SHALL LIVE BY FAITH."
For the righteousness of God is revealed in the gospel from faith to faith, just as it is written, “The righteous by faith will live.”
For therein is the righteousness of God revealed from faith to faith: as it is written, The just shall live by faith.
For in the gospel a righteousness from God is revealed, a righteousness that is by faith from first to last, just as it is written: "The righteous will live by faith."
For in the gospel the righteousness of God is revealed—a righteousness that is by faith from first to last, just as it is written: “The righteous will live by faith.”
For in it the righteousness of God is revealed through faith for faith; as it is written, "The one who is righteous will live by faith.
For in it is revealed God’s righteousness from faith to faith. As it is written, ‘But the righteous shall live by faith.
For in the gospel the saving righteousness of God is revealed, by faith and for faithfulness, just as it is written: ‘The righteous will live by faith.’”