Handles better for you?.
Are you going to expect access to a large lens range? That particular Nikon cannot use all Nikkor lenses with AF engaged because not all Nikkors have focus motors. The D40X takes the Canon approach to placement of the focus motor by removing it from the body - a good thing, too, in my opinion, but some will understandably dislike it's limitations regarding current lenses. http://www.dpreview.com/news/0712/07120402tamron18250.asp..
If the Canon 2-lens kit you referred to is the one that you commonly see advertised, then I recommend against it. Neither of the two lenses is very good. If you buy the Canon, get the amazing "thrifty 50" 50mm f/1.8 lens or the brand new 18-55IS lens. You will be pleased with this decision..
All the photos on my photo hosting site (below) were taken with the Canon 350D and either the 50mm 1.8, the 17-40mm f/4L, or the 70-200mm f/4L lenses. Good luck in your search for the right camera for you..
This issue with the lenses is one I came across somewhere. I have heard that the canon ones supplied are all plastic (except the optics) and not of great quality. if I can pay a little more for the nikon and get a good lens set then I will pay the little bit extra. I'm not fussed about being restricted to 50 odd lenses or whatever it may be being that there is no motor in the camera. I will survive!..
Not to sure there is a significant difference in build quality between the kit lenses for the D40 and XTi...both cameras are very good with different feature sets, but entry level kits do not include the best quality lenses (traditionally)...
I shoot Nikon, but either of these camera are fine, just handle both and see which you prefer..
Nikon has the better kit lenses, that seems to be a consensus - but the Canon has more AF points. Nikon has the better flash system including the great little SB-400 which Canon can't match..
The sensor cleaning thing seems to be a bit of a gimmick..
The lack of AF motor in the D40X does mean you miss out on being able to AF with good cheap lenses like the 50mm f/1.8 - but Sigma has brought out the 30mm f/1.4 and other producers like Tamron are bringing out 'D40-friendly' lenses..
In general Canon and Nikon's lens ranges are both very good and often have equivalents. Canon occasionally put image stabilisation in where Nikon don't in their version e.g. on the expensive 17-55 f/2.8 - but Nikon perhaps have the better quality cheaper lenses, e.g. 55-200VR and 70-300VR, both of which are very good for their low cost..
Wide range selection of lenses, too. (zeiss although expensive) + minolta glass..
Before you post, try and be as neutral as possible..
Nikon owners will always say (and you can almost see the look of innocent objectivity on their faces as you read their words) "go and try both and see which feels best", knowing of course that the D40/x instantly feels better than the 400D. They hope you will then fail to notice the technical shortcomings of the D40 - things you imagine won't matter like the lack of mirror lock-up and the small number of AF points, as well as the inability to autofocus with a wide range of Nikon's more affordable lenses..
The amazing thing about the 400D is that while it is a fine, easy-to-use entry level camera, it is also perfectly well suited to quite ambitious work. I use mine with Canon's 70-200 f/4L (professional grade lens, Nikon has no equivalent), the amazing 100/2.8 macro (Nikon's is *much* more expensive), the 50/1.8 (the D40 won't autofocus with Nikon's 50/1.8) and the versatile and optically excellent Sigma 18-50/2.8 (the new HSM version which works with the D40/x is significantly more expensive)..
So there's my unbiased view ..
And don't forget that the Canon kit lens that Nikonites always say is no good (and, in fact, it is not up to the quality of the Nikon kit lens) has been replaced with a new kit that has image stabilization but remains inexpensive. Preliminary reviews of the new Canon kit lens have been very good..