I don't have the Nikon 18-55 but I'm interested in it. People usually don't like it (because of the feel of the lens?) but all the reports say it has excellent performance. It's simple, well-made and doesn't try to do too much. Ken Rockwell explains it here (I hesitate to recommend anyone listening to Ken Rockwell but this time it sounds sensible):

http://www.kenrockwell.com/nikon/1855.htm

If I were you I would keep the 18-55 - you won't get anything for it if you try to sell it - and add a second simple lens, a 55-200mm telezoom. The obvious choice is the Nikon version but I bought the Sigma a couple of months ago when I had a problem with my 18-200 on holiday. I rather like it and it's only $149. Just make sure you get the HSM version that has the auto-focus motor built-in so it will autofocus with your D40

http://www.bhphotovideo.com/c/produc...m_f_4_5_6.html