IMO, I'd only look at a camera with a full-frame image sensor, but your budget may limit you to less expensive bodies.
Half of the equation is the glass (lens). The XSi is an overall unremarkable camera body, but it gets the job done. You'll notice a big difference though between a low-end lens and a quality lens on almost any camera body.
Don't invest in the EF-s lenses, they'll only mate with APS-C sensor bodies. Go with the standard EF series lenses so that when you eventually upgrade to a higher-end body all your lenses will still work.
I tend to recommend the craigslist route to many friends looking to get into photography. There seem to be a lot of people who upgrade for no good reason, and end up selling their old bodies for a good price with only a few hundred to low-thousand shutter activations (practically new).
Canon and Nikon gear both hold their values well. The Canon gear is generally considered to be a little better than Nikon, but that is kind of an "emacs vs. vi" argument... Everyone has their own religious preferences.
If you must compromise on the price, get a good lens and a decent body. Upgrade the body when you have some extra cash.