My one biggest lesson in photography and some may disagree with me but the lens is much more important than the camera. There will always be a newer better camera but a quality piece of glass can be kept. Look into prime 50mm lenses. They can be affordable and very good.
Canon Rebel XSi.. got a nice balance. The next version was announced, so expect to see price drops pretty soon (or get the XTi, which is the latest)
Also consider a nice lens. Should be at least half of your budget, but makes the photos.