I have a D40- I love it- it's really light and small.
In reference to the lenses, if you were to expand, you just need to do your research and make sure that you get a lens with the internal motor- like the Nikkor 50mm AF-S that just came out... or a Sigma HSM lens. They will auto focus on the D40.
The kit lens with the camera should be the only lens you need to get started and comfortable. Once you've mastered that, then move on to maybe a zoom lens. :-)
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-Jen-
Cassie Jones AND Katrina Kennedy tutorial collector.
Nikon D90 * Nikkor 55-200mm f/4-5.6 (VR) *
Nikkor 50mm f/1.8D * Tamaron 28-75 f/2.8 *
Sigma 30mm f/1.4 HSM (LOVE IT)
Adobe Photoshop Elements 5.0 & Lightroom 3.0 beta
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