I disagree. I think IEMs do imaging exceptionally well, at least the ones with balanced armature drivers. Their soundstage is smallish and compressed (though with high end IEMs it doesn't have to be), but their imaging is razor sharp. Instruments are clearly separated in space and you can easily tell who was where in the recording venue, provided you listen to music that has some soundstage in the first place.
The ER-4P had excellent imaging from what I remember of it's sound, and the E500 is not bad at it either, with a wider and more open soundstage than the ER-4P. Unfortunately, I have no experience with the K701, so I can't suggest an IEM that sounds like it.
Don't expect the type of performance that you can get with a properly driven full-size hi-fi headphone, however, unless you spend serious money on a fully custom-molded IEM (like the Westone ES2).