I previously owned a 300D and was unsure if to upgrade to the 550D, 7D or the 50D. All of which had various prices and features. The 50D sits happily in the middle of what I wanted. Uses CF and the Canon 511 battery.
The step in image quality to the 50D from the 300D is signficant as is the cameras ability to use lens.
Fantastic autofocus, improved metering, excellent modes allowing for the novice to move from scene modes "portrait", "sports" etc, through to Creatice Auto (which allows some simple customisation, through to the full customisation modes.
6 FPS shooting speed with a large JPG buffer. Even with my old 1GB CF the write rate to the CF is improved over my older camera. I have bought a 8GB UDMA CF which will allow 300x write speeds.
I didn't buy a kit. Instead I bought a 50mm f/1.8 MkII lens instead which is an excellent lens for the price and ideal for portrait photos.
The camera build quality is excellent and the weight is just right. Size of the camera is ideal for medium to large hands - is bigger than the 550D not as big at the 7D.
I strongly recommend this camera over the 7D (assuming the 8FPS and video aren't essential for you) and over the 550D (beginners camera with lesser build quality).
The saving in price over the 7D means you can buy some additional glass which will benefit you in the long run.