I have the Nikon D40 also. It is a great, inexpensive body, and you can get great lenses for it. You just have to make sure they are the AFS lenses, with a motor. They need to be able to auto focus.
Ken Rockwell uses the D40 and still prefers it over the later models Nikon has come out with:
NEW: Nikon D60 and Nikon D40x, slightly downgraded versions of the D40, but with more pixels and a higher price. I prefer my D40 over the D40x and D60, even for the same price, and since the D40 costs less, the D40 is the deal of the past two years!
I have the kit lens, but don't use it much now since we recently bought the new
35mm, f1.8/ Nikon lens (it's a prime lens, not a zoom), and the Tamron
17-50mm, F2.8.
I love the 35mm. I have been coveting the 50mm, 1.8 lens for some time, but didn't want to manual focus with it, and it won't auto focus on my D40. The 35mm is great for portraits as long as you don't get too close. For $199, it's an awesome lens. It is the "hot" lens right now, so they are having a time keeping up with demand, but we prepaid when we ordered and got them in about three weeks.
My flickr page:
http://www.flickr.com/photos/calligraphycarol/