Here is my take on it. It is a 7th level spell.
Why? Well, aside from my being a naysaying jerk, the spell deals one of the few types of damage that is hard to generate resistance to, Force Damage.
It isn't an energy type, which have loads of creatures with natural resistance and a number of spells to generate arcane resistance. So it is an attack which, unless we start making a slew of other defensive spells and specially made creatures, is almost unstoppable; even sonic damage has more creatures resistant to it. If I was comparing it to Fireball, I'd automatically raise the spell level by one (to level four) because of the type of damage it does.
But it goes further to one up Fireball by increasing the damage cap. So I'd add another level to the spell there. That is level 5 so far.
Additionally, it goes further by allowing you to select which targets are blown apart and which ones aren't. This ability is spooky awesome, allowing a spread-target combo that will make your enemies whimper... provided that there is anything left to whimper. 6th level.
And then, let us add on that the spell does status effects in addition to base damage. This spell has the capacity to knock an enemy prone and stun him in addition to doing a whole slew of damage that is near to impossible to defend against. Prone + Stun + Allies Unaffected = Coup de Grace.
Seems a little harsh? Yeah, I agree. But I haven’t considered things like the larger radius, the interesting choice of saving throws that will leave even high level rogues feeling the pain, and the lack of a material component. So, for the sake of covering my ass, I’ll say that it was considered as the tipping points to make it level seven.
BUT if you were to raise the casting time to a full round action, I would say it makes a pretty darn nifty sixth level spell.
(Many apologies; I am aware that this is not a fireball, but when I think about balance I try to compare a considered spell to an already existing one(s). I’m sure that WotC has published extra spells that would make this look like a 4th level spell, but I’m just running my comparisons off of the players handbook. And I'm too late, aren't I?)
Also, for the sake of quelching debate by rules lawyers you might wish to state explicitly whether this is considered an area or a targeted effect.
Chances are someone will have activated spell turning or some such, which will raise that question. Right now it is a case of DM chooses. (Which is fine by me, but I’m not a rules lawyer.)