I've bought a Nikon D40 DSLR about a month ago.
I'am still learning this gear so there may be some pitfalls in this information but here my experiences up to now.
I do not wanting to say that you need a DSLR here, because compact camera's can do very good photo's too, and one has to make the photo by him/herself the creativity in composition and lighting is the major part of the photo the camera the minor part.
But if you want the advantage of exchangable lenses for photographing in low light and fast shutter speed for photographing moving objects the DSLR comes IMO in.
Its one of the most affordable DSLR's though its already an older Nikon model, I think due to that within a half year one can not buy this one new any more.
The camera is only 6 MP while there are compacts with the double now, but keep in mind that MP's are not everything. As long as you don't go bigger than 20 X 30" this camera does IMO a great job for you, and the image quality is IMO better than on the 10 MP D60, from the images I saw on imageresource.com.
They are also sold manufacturer refurbished (at least in USA), for 375 US$, they come with the same 18-55 mm lens as I have then (only lack VR stabilisation) http://www.adorama.com/INKD40KR.html
I've been shooting quite some photo's with it and my experience is that the 18-55 mm zoomlens and the camera work great.
I also bought a SB400 flash, you don't really need it if you have enough lighting, but if you need it you can turn it 90 degrees to bounce it against the ceiling, the object you photograph is not flashy then, which works very fine, these flash units are about 99 US$.
Further I protect my lenses with Hoya UV protect filters those do only some UV blocking but further nothing but protect your lens when you shoot with the lenscap removed. Its only a matter of ordering the right diameter for the standard 18-55 mm zoom its 52 mm and screwing it on the lens, the lens cap fits in the filter again so you can still protect both the hoya filter and the lens with it.
This DSLR has no live view so you have to do everything regarding photo composition with the view finder. IMO its not a biggy because you get a crystal clear view finder which works nicely and displays apeture and shutter and meter info, and, how do you keep a DSLR stable in your hand when viewing on a life view lcd?
With a tripod it goes but else I don't know how to do it.
Working with a DSLR is bit different than with a compact you need to work clean when changing lenses e.g. and you are reading and prepairing the camera which takes you one time half a day before you can make the first photo, and you are always wearing a small hand bag with you that contains your camera and your lenses. Its all do-able but if thats not your thing a compact may be a better choice.
But shooting in Auto mode is as easy as photographing with a compact camera. In auto you can not change anything the camera locks everything.
When you shoot in P mode you can change settings like white balance and the camera still does the aperture and the shutter.
When you shoot in A mode the camera does the shutter but you can do the apeture with the thumb wheel
When you shoot in S mode the camera does the apeture but you can do the shutter timing.
When you shoot in M mode you have to do everything (shutter and apeture).
This modes can be choosen by turning the wheel that sits on the top of the camera, there are more programmed modes for specific situations like sport, portrait, night protrait, landscape, macro, and very handy a mode in which you turn off the flash but further automatic.
You can choose to plug some settings into your D40 which I found on the internet, IMO it improves the colors and the lighting.
Below a picture I did in Auto mode using the sb-400 flash 90 degrees turned bouncing against the ceiling:
A picture of "family Swan", risking my life because daddy swan protects the children... in auto mode
Below a macro photo from a Thai made fake Breitling with the standard 18-55 mm zoom lens in Macro mode (top wheel on macro)
A photo of the naomi campbell head sculpture I made (auto, using 18-55 mm tele).
Below a photo in auto mode (without the special settings)
Below a photo in P mode (using the settings I found on the internet).
Below a photo of a design house using the special settings.
Below a photo I made with a AF 50 mm f 1.8 D lens (aprox 120 US$), and this lens has nearly no distortion. I bought wanting to experiment with a lens but its not adviceable to buy this lens for a D40, a D40X a D60 or a D5000 because these camera's lack the focusmotor and it takes all my effort to get it manually focussed, for other Nikons this lens is a bargain (if you own e.g. a D200, get one!).
A 50 mm lens becomes a 75 mm lens on a D40 (the DX image sensor in the D40 format is smaller than fullframe and that causes the multiplier factor but its a little bigger than APS-C, and thus the multiplier is 1.5).
The photo is made with shutter 1/4000 and an apeture of 2.0 to isolate the flower from the background with a small field of dept (smaller apeture is bigger field of dept, bigger apeture is small field of depth). If you want 50 mm big apeture lens on a D40 better buy a AFS 50 mm F1.4 G or a Sigma 50 1.4 HSM (the sigma is a big lens but has a better bokeh as far I read, which stands for being able to make a very nice blurry background), using the settings.
Below a photo of Carmen with the 50 mm, no distortion this is Carmen as she is! Only light was bit dull.
You can find the settings I'am talking about here: http://www.kenrockwell.com/nikon/d40/users-guide/index.htm
There is also information on that site for correcting distortion in photoshop for a lot nikon lenses, e.g. for the standard 18-55 mm zoom the D40 comes with. If you benefit from the information, I think its honest to do a small donation to that guy.
If one owns another nice camera IMO feel free to put a review IMO we all benefit from this kind of information.
Mytime & Helen & Carmen