The Canon Rebel XS is new, and is their latest value DSLR. Looks pretty good:
http://www.dpreview.com/reviews/canoneos1000d/
I have the Canon XTi, and 4 months ago switched to Nikon with a D300. I haven't sold my Canon stuff yet though - and I think that being an owner of both makes me pretty neutral!!
Personally I would go with Canon every time at that price point. Here's the reason:
You get your DSLR and a zoom lens to go with it. It takes great photos, and you're happy you upgraded from a point and shoot. Everything is good, but when you see other people's photos on flickr, you can see you're missing something.
The second lens you buy for a DSLR should be a 50mm f1.8 lens. This will cost from 85 to 105 bucks (the Canon is cheaper). This lens has a really wide aperture (f1.8) which means that you can:
- Take awesome photos indoors or in low light situations without using a flash. You'll be using the natural lighting, and your photos will look way better than any point and shoot.
- Blur the background on your pictures. The wider the aperture on your lens (f1.8 is good), the more selective the focussing is. If you focus on a person or object nearby, the background will not be in focus. This makes pictures look extremely professional, and makes the person/foreground seem to 'pop out' of the picture.
Nikon has historically made 'dumb' autofocus lenses. They sold cameras with motors in them... the camera twists a screw thread in the lens, to make it focus. Canon has always sold lenses with the motor in the lens. The camera just has to send a signal to the lens. Now Nikon is also making lenses with motors in them.
The problem here is that Nikon's cameras under $1500 no longer have this autofocus motor in the camera (it's a cost cutting thing). So the D40, 40x, 60 etc. CANNOT AUTOFOCUS any of the old lenses, including the 50mm lens. You're OK once you get to the D300 etc. (which is why I bought it) - but I wouldn't recommend any of the lower price Nikons at the moment, as the lens selection for them is just too limited.
[Edit - the D80 at $750 or $950 with a lens can also autofocus the 50mm f1.8]