I would step it up to at least a D60. But in all honesty I think Nikon's 3 competitors have better priced and better quality entry-level SLR's, the XSi, the A200/A300, and the E-510 offer better performance per dollar spent, in addition to that the D40 doesn't work with most Nikon film lens (at least not the autofocus) - so you'd be stuck with a much smaller selection of higher priced lens. Considering you are not stuck to any system - definitely look at all competing models to find which one is best for you. You're not just buying a camera, you're buying into a system. If you choose Nikon now, its Nikon equipment and camera bodies from here on out (or the hassle of reselling equipment). Look at Canon, Sony, and Olympus as well and see which one works best for you, they all offer unique benefits and they all make incredible cameras that will give you great shots!