im trying to buy a dslr and finally went to B and H the other day to check out cameras. It turns out the cheapest dslr's that feel comfortable in my hands are the d80 and the 40d. Now both of these are roughly in my price range but the 40d is only $200-300 more. I want to know what is the better for versatility and picture quality?

Bodies arent the reason for picture quality. Lenses give you the quality.

I take it you have larger hands since the D80 and 40D feel comfortable. The D80 is more of a higher end consumer camera (like Canon's XT series). The 40D is more in the same category the D300 is.
Heres a side by side comparison (http://www.dpreview.com/reviews/compare_post.asp?method=sidebyside&cameras=canon_eos40d%2Cnikon_d80&show=all)

Canon or Nikon. Cant go wrong with either.

id go with the Canon 40D .... its better i guess

If you can afford some "L" glass go for the Canon. If not grab the D80 for a rock bottom price and get some quality glass to go with it.

i am very happy wih D80 with some great lens

I'm not a nikon guy, but I just order a 5d and a 40d last week. I notice the 40d seem abite faster than the 5d on focusing, especially in a dark low lite church. The high ISO is not that bad either, hope this would help you decided.:thumbsup: