The 40D uses the same newly redesigned menu system as the 1D Mark III. It's arranged in clearly labeled--and easy to see--tabs that you navigate via the joystick. You select the options via the big thumbwheel on the back of the camera. There are 20 different selections for the combination of image size, quality, and type, including the dubiously useful 2.5-megapixel sRaw format.
Live View function settings include two so-called "Silent Shooting" modes that determine when the shutter curtain returns to position--immediately, or on a delay--so that you can control when the sound occurs. (The immediate mode supports burst shooting.) Not quite silent, but definitely quieter than most Live View implementations. There's also a metering timer option, with various choices ranging from 4 seconds to 30 minutes, which sets how long the camera displays/remembers the exposure information after you've released the shutter button.
Because of the sheer number of custom parameters--there are 24 in the 40D--the custom functions in Canon's higher-end models were starting to get unwieldy. So it's nice to have them broken down by category. It would be nice to be able to clear the settings within a category as opposed to a single Clear All, though.
Though its name--My Menu--conjures up visions of snapshot camera interfaces, the ability to create a custom home menu page with almost any setting option is very useful. I'd like it even more if you could set the options one level deeper. For instance, instead of going to the Live View function settings menu, it would have been more useful to go straight to Enable Live View, one level down. In addition, it would have been nice for the My Menu settings to appear on another screen to make room for one more custom setting on this page.
Though the joystick (middle inset) isn't new, it remains one of the nicer navigation controls available on a digital camera. Accommodating the larger LCD meant moving the buttons from the left side to the bottom. I generally find them easier to use when they're on the left, but my bigger complaint is the new feel; they're smaller and more flush with the body, which makes them a little harder to use. Canon also added a direct-access control for the Picture Styles on the far right. Another addition to the body is an AF-ON button for initiating autofocus when in Live View mode. However, the button can also be configured to work like a traditional focus lock. Canon has historically eschewed the use of a separate focus button.
Canon added three custom settings options to the mode dial in the 40D, which I think is the perfect number of options: enough that you're covered for a variety of situations, but few enough to be able to remember which slot has which settings. If you do forget, cycling with the Info button on the LCD will display the settings for the current selection.