Since you have no lenses the only real choice for you is to go for the xti.
I'll explain.
The DSLR body is a great piece of machinery. It allows you to take faster better less noiser pictures. It decidedes how many megapixels you have in each picture you take, it does many many wonderful things.
It does not, however, take the actual picture.
The lens is what does this.
Assuming you have a limited amount of money to spend on the body of the camera, if you buy the D40 you will probably have to stick with the kit lens.
Um????!!! I strongly disagree with this premise. It doesn't make sense. The D40 can accept ALL lenses, it just cannot autofocus with lenses that are not AF-S (that have an internal motor within the lens). This is not as big an issue as it would seem, especially if one is young and has good eyesight! In some instances, actually, manual focus is preferred (macro shooting, for example, where DOF is very narrow from the get-go). There is no reason why someone cannot buy a D40 and use any lens he or she chooses. Yes, there will be limitations on autofocusing those lenses, but that's not insurmountable.
The D40 also works with some third-party lenses which also have internal motors, such as Sigma's HSM lenses. Many people who have a D40 have purchased the Sigma 30mm f/1.4 lens to give them an autofocus fast lens which is a little wider than the kit lens which comes with the D40. People have used a lot of lenses with the D40, both manual focus and auto focus, and have gotten excellent results. I know of one person who actually puts his D40 on the rather massive 200mm f/2 AF-S lens and gets some phenomenal results. The D40 really shines when it comes to being able to shoot with a high ISO and in combination with the magnificent 200mm f/2 lens, it struts its stuff big-time.
SD cards vs CF cards: for many years CF cards were the only ones available, and then somewhere along the line manufacturers began putting SD cards into their P&S cameras. Eventually Nikon surprised everyone by putting an SD card slot into their D50, and eventually after that, into their D80 and D40/D40x cameras. Now one of the delineations between "consumer" and "semi-professional" or "professional" cameras seems to be the use of SD or CF cards. Personally, I much prefer CF cards (and that's not just because I have a huge stack of them starting way back from my first digital camera, the Nikon Coolpix 900!). For one thing, they seem sturdier and more robust, and not as easy to lose or misplace. Right now you can get much larger memory sizes in CF format than in SD, but that is rapidly changing. I suspect that serious amateurs and professionals will be continuing to use CF cards in their cameras for a very long time. One card format or the other should not be a deal-breaker, though, as both work quite well.
Battery life: I think the D40 has a decent battery life; I don't know anything about the Digital Rebel. Regardless of what camera you decide to buy, it's prudent to also pick up a spare battery at the same time, as well as an extra memory card.
Megapixels. One of the greatest sources of confusion for many people is the whole megapixel thing. Oh, well, if camera x has more megapixels than camera y it is a better camera, right? Not necessarily! In fact, there is a point at which camera manufacturers begin banging up against the wall -- when they start attempting to cram too many megapixels on to a small sensor. This is most noticeable in P&S cameras. The end result? Noise....lots of noise! In DSLR cameras the sensor is larger but eventually again that same issue will crop up: where does the manufacturer draw the line? When is it time to pull back on the MP and start finding a way to put a larger sensor in the camera body?
Will you, the consumer, notice much of a difference between a 6 MP camera and an 8 MP camera? I don't think so. The 8 MP might give you a tiny bit more room for maneuvering if you need to crop extensively. What's optimal is to learn to shoot effectively, to shoot so that your subject fills the viewfinder and there is no need to crop at all, or very minimally.
Extensive cropping can pretty much ruin an image in terms of resolution, original ratio, DOF, etc., etc.
So which camera should you buy? Actually, I can't tell you, and neither can anyone else here. This is one of those things which needs to be a decision based on your own handling and appreciation of the ergonomics of each camera body, your own consideration of your budget, your own interest in photography and your guess at how far you might want to go with it. When buying a camera body, you're not just buying the body itself: after a certain point you are also buying into an entire system. Look ahead and see what lenses are available in Canon and Nikon. Think about what you like to shoot now and what you might want to shoot further on down the road and take a look at which lenses might fulfill your needs. OK, right now you mention urban landscapes and people shots.....so look at the Canon website and the Nikon website and run a Google search to see whiich lenses are specifically recommended for these types of shooting. The kit lens which comes with either the D40 or the Digital Rebel is only the beginning: if you become serious about photography you will definitely want to move beyond that and into higher-quality, faster, more expensive lenses....so it behooves you to do a little homework in advance of that time.
This is not to say that one can't buy into a system and then decide to switch. People do that -- they may have a substantial investment in camera bodies and lenses from one manufacturer and decide that the other really meets their needs more, so they sell off all their gear and start afresh.... That's easier to do when one doesn't have many expensive lenses, though!
Hope this helps in your decision-making process. Buy the camera which feels best to you and which offers the things which will make photography satisfying and fun for you.