Bad laydown, was I priced in?

[Pocket77s]

1 table tournament. 4 handed. blinds are $2/$4 dollars. 2 two places paid.

Hero is UTG with 8 [img]/images/graemlins/diamond.gif[/img]7 [img]/images/graemlins/heart.gif[/img] Hero raises to $12 total, the button (who likes to see flops) thinks for awhile and calls the raise. SB moves all in for his last $23 dollars in chips. BB folds. Pot size $54. What should Hero do?

What is the correct play? Hero has a stack of about $45 post raise. the Button has about $30 left to call the all in bet. the SB was short and getting desparte.

Another question. This is my weekly home game. My friends know that I like to start playing very loose and aggressive as the game gets short handed. So when I raise with something like 5 [img]/images/graemlins/spade.gif[/img]6 [img]/images/graemlins/spade.gif[/img] from UTG and we are four or five handed, they know that I could be raising with alomst anything and they are more likley call my raises. I don't want to get blinded off by waiting for premium hands but I also want them to keep guessing what I have. Usually if they connect with the flop they will not let me push them around and it's hard to represent a good hand when they know I get loose when short handed. Any comments? Advice? How should I play in this spot?