I really want to get into still photography. I'm looking for a solid camera within a $400-$700 budget. I want to have some money left over for lenses. The D40x looks interesting and so does the Rebel XTi.
You could save $125 and get the XT. It's a great camera... and I doubt you'll notice a difference between 8 and 10 mega pixels other than the size of the files. Then, put the money you saved into a better lens.
I don't have any experience with Nikon... but there are a lot of members here that do.
lenses are more important than the camera go with either Nikon or Canon. I agree with going for the XT over the XTI if you are going to put that extra money in a good lens. MP really isn't everything and 8 compared to 10 is hardly noticable.
Look around. I went on cnet.com and they did a comparison between the Canon and the Nikon d40. I went with the Nikon. There are two deals right now on the Nikon. If you look around you can find a 6.2 megapixel Nikon D40 with two lenses. An 18-55mm and a 55-200mm for about $600. The other is at Costco, a D40 with an 18-55 and a 55-200, but a 10.2 megapixel for about $850. A professional photog friend of mine says that if you want to shoot good photos, the best is either the Canon or the Nikon.
I shot this shot the other day with my Nikon and the 200mm lens. I'm very happy with it. http://www.dvxuser.com/V6/showthread.php?t=120619
Don't get anything other than Canon or Nikon. If you go with Nikon, just get the D40 and not the D40x. Unless you are printing photos over 14 inches there isn't much need in the extra MP. Plus there is rumor right now that the D40x may be replaced soon.
I have the D40 and love it. Be aware though that you are limited with what the camera can do automatically with older lenses. It must have and AF-S or AF-I lens in order for it to auto-focus & meter. You can meter with the slightly older AF lenses but will have to manually focus (like the popular 50mm AF prime). On an upside, it will take the very old and very cheap AI mount lenses. I picked up a 75-150mm Series E for $50. Manual meter and manual focus but it is very sharp.