The Canon 40D was followed up by the 50D, and now the current 60D. The 60D is a bit different though; it has a polycarbonate body (the 40D's body is magnesium), an articulated LCD, and offers video, which the 40D did not have. However, with the standard 18-135mm kit lens, it is more than your budget.

Currently there is a special on the Canon T3i which may be of interest to you:

http://dealnews.com/Canon-EOS-Rebel-T3-i-w-3-lenses-more-for-1-048-after-rebate-free-shipping/519109.html

Here is a review of the T3i:

http://www.dpreview.com/reviews/canoneos600d/