The tradition with channel swimming is to use Lanolin (which comes from wool) which is why swimmers in old photos are often covered in white stuff. Some still do use it but a common thought today is that it tends to block your pores and over a long time make your body not work as efficiently as it would. Mainly I think if provide a psycological barrier to the cold.

Vasaline (as pp said) is really only necessary on chaffing spots. Covering yourself iin the stuff for such a short swim, I think would be a huge pain and could actually make the bike a bit unsafe - though you may not put it on your handlebars or saddle it will definiately find its way there if your legs and arms are covered.

Personally I think you would be best off warming up well before the start and trying to get in the water for a few minutes before to adjust to the temp. 17deg is not really that cold so you really shouldn't be effected for a sprint race.

You can actually train your body to cope with cold water by training for increasing periods of time in cold lakes/ocean waters. It does not take long for your body to deal with the cold better and there is actually a memory effect (you could train heaps in cold water, leave it for a few years and your body would not have to be totally retrained).