7D + a Canon 100-400 for broad spectrum shooting; or a 400 f/5.6 if you're going for, mainly, birds in flight.
As far as feature balance/function vs price, the 7D is still the sweet spot for birding. However, if you're willing to give a little bit on ISO speed and a little less complex AF system, the 40/50D are still terrific bodies and you can take care of any weather-related issues by picking up a couple of RainSleeves (http://www.bhphotovideo.com …18_Rainsleeve_Set_of.html). Heck, I recommend picking those up even if you get a 7D...they're really great to have tucked in your bag.
The 400 prime is faster to focus and will help you the birds before they're gone, but doesn't offer the flexibility and IS that the zoom does.
The zoom has better minimum focusing distance (MFD), so can be used when the feather-brains get a little closer and the zoom can help there, too. The push/pull design of the lens puts some people off, but now that I've used it for a few years I prefer it for this application. While the IS system gets dinged for being old, it still works well enough to be able to shoot down to around 1/60 @ 400mm once you have your lens technique down well.
Regarding budget options for lenses, you can certainly (and should) look at some of the Sigma options for longer zooms, too. The Sigma 150-500 and 50-500 are a couple of options that enjoy some popularity, as well, and can usually be had for less than the Canon options.
Some offer up the 300 f/4 and a 1.4x TC as a good option, but I caution against anything requiring a TC for a dedicated birding setup as you wind sacrificing shots, while trying to fiddle with adding the TC and having your subject leave, or, you're shooting at a focal length that you'd have with a "native" lens and introducing possibilities of the TC impacting your image quality. It's less likely when using a prime than when slapping one on a zoom, but the possibilities are still there.