Why to buy a Nikon D40
Nikon D40 Manual (.pdf link, be patient)
1. It is definitely the most compact of the Nikon DSLR line. This means you are more likely to take the camera than leave it at home. I love my D2x, but it rarely leaves the house - it's just too big and awkward unless I'm using it for a pro gig.
2. The LCD screen is awesome and equaled only by the size and clarity of the screen on the D80. I didn't realize how valuable a big LCD was until I used one.
3. Low price and a good lens. The 18-55 kit lens is more than adequate. My wife shot professionally with the "Gen I" 18-55 until we bought her an 18-200 VR.
4. Great DSLR to learn on. Intuitive menus with examples of how settings will affect photos. Less guesswork = better photos.
5. Great low-light camera. Similar high-ISO performance to the D50 which compares favorably to the D70, D80, D200, D2x in low light performance.
In short, Nikon has set a new standard with the D40 (similar to the standard set by the D70 a few years ago). They've done away with the on-board focus motor, but they don't even make new lenses anymore which require the on-board motor. If you have a collection of non-AF-S lenses, pass on the D40 and buy a D50. On paper, the D50 has a few more features (and I'd encourage you to compare the D40 to the D50), but in practice, you're going to get virtually the same results under all circumstances in a lighter body with some very helpful features for the first-time DSLR owner.