I upgraded to this from my old olympus c8080, and let me tell you for an entry grade DSLR, this is it, great quality images at 12mp compatible with over 60 lenses and 9AF points, this really is the best beginner camera out there. If your looking to take your photography to the next level then you need this camera
I got one of these as a replacement for my old 300D that got water damaged. Although it is smaller it still handles very nicely. Canon have made some very good improvements since the 400D. The ones I find most useful are: the dedicated ISO button and ISO display in the viewfinder; the switch to SDHC as these are dirt cheap and massive (see my other review on the 4GB SanDisk Extreme III); the warning that it is still writing to the card if you open the flap too soon (but you need a really slow card for that to happen) and finally spot metering.
The noise handling is also very much improved since my 300D and it's nice to see nearly everything can be tweaked to your liking. The screen is gorgeous although I recommend a protector. The simplified button layout with most things on the right mean you can do most shot to shot adjustments with one hand, useful if you have a long heavy L lens on.
It's amazingly quick and it can fill a 4GB card in 4 minutes with about 800-900 shots at Large Fine JPG quality.
The IS lens is a nice improvement over the old 18-55 kit lens and you can see it working.
I thought the live view was a bit of a gimmick at first but it is really useful for tripod work, especially macros when it can be a bit tricky to check the focus in low level shots, especially with the 10x magnification.
Battery life is also greatly improved over the 400D. I shot over 2000 shots so far and only needed to recharge it 3 times and I have a full battery at the moment.
I suggest you check whether you have any dead/hot pixels by shooting some long exposure underexposed out of focus shots - don't expect there to be none, but don't settle for more than 3. You won't notice them in normal shots anyway.
If you have a 400D you probably won't want to upgrade, but any 300D/350D users will love the new features and the quality.
I highly recommend it especially with the £50 cashback (which takes a few weeks) and get yourself a 4GB SanDisk Extreme III SDHC card too.