I asked myself the same question and ended up with a 350D and a 17-40 L (whiwh I could not have afforded with the 20D).
While I'm very happy with the image quality of the 350D (and of course with the 17-40), I often wish that I had the 20D because of several factors being:
- its size (the 350D is too small for my hands, even with the grip)
- the fps. I like to shoot sport. 3 fps is not enough for that
- highlights preservation: from what I heard, the 20D is better at NOT burning the highlights
- AF speed and low light ability. I often find myself with the AF hunting in low light. Apparently, the 20D does a little better in that regard.
These are subjective critics. They might be pointless to what you want to do with your camera, so take them carefully.
In terms of image quality, I think you'll be happier with the 350D and a very good lens than with the 20D and a crappy lens!