My recommendation, based on your experience level and intended use, would be to stay away from a digital SLR. You'll get more use and have better results with a high end SLR type camera.
One to look at is the Canon PowerShot SX10 IS for $349.
JohnNJ
I disagree.
The D40 (and D60 for that matter) are made for beginners and are extremely easy to use. DSLRs have complete automatic settings; all you do is zoom in, zoom out and click.
MH
Who the hell is Pat?
"Pattimuss doesn't run, he prances most delicately, like a beautiful but sad fairy, winged and capped, curly toed shoes on each foot, dancing on dewdrops while lazy crickets play soft music for him to keep time by...." - Wes