I would go with the Canon. Regarding features, the XTi is comparable to the Nikon D80, which is the step-up model from the D40. Essentially, you are getting more bang for your pound, as it were.
Bottom line: Nikons are expensive. In fact, my opinion is that they are akin to Nike sneakers; that is, overpriced. I almost exclusively use Canons. Your money is going to go a lot farther.
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