There really is nothing that the 40D does that you can not do with the XTi. I don’t consider a XTi to 40D an upgrade unless you want one feature, live view.
Puh! The difference between the 400D and the 40D is tremendous. The 40D, with a BG-E2N mounted, is much more a 1D Mark III "light" than it's a beefed up 400D. Virtually everything the 400D can do, the 40D does twice as good. Especially now, when Canon has felt the competition from the Nikon D300, and thus the cost of the 40D has been reduced to levels where you get very much camera for your money, it's an excellent choice.
There are more features on the D300, but for fast action photography the 40D is the best camera today, south of models in the range of the 1D Mark III.
The EF-S 55-250 mm f/4-5,6 IS is an excellent lens for the money. Which doesn't say that the EF 70-200 mm f/4L IS USM isn't better, as that's one of the best telezoom lenses money can buy, but you get a few 55-250 for the same money.
I agree 100% Anders!!, whilst I'm not expecting much, if any, improvement in image quality, having handled one in the shop, the whole experience is so much better. Faster FPS, rear wheel (If there is one thing, and probably the ONLY thing on my beloved 400D that I dislike, is having to push a button, whilst moving the wheel, to change the aperture in maual mode. As I'm getting more and more experienced with my first DSLR I am now finding it more restricting to change my aperture setting quickly on the fly), joystick and the pure feel and weight of a much more robust feeling piece of equipment.
Pete
(sorry when I read the thread I had to reply with that). I recently upgraded from a Rebel XT to the Canon and shot 100 or so pics in one session without any noticeable fatigue. In fact depending on your future lens investment this body maybe a better weight balance, which is more important. As an example I slapped on a 70-200 2.8 IS L on my XT body, it was ridiculously front heavy. So as the old saying goes, size doesn't matter, it's how you use it.

