[youtube:http://www.youtube.com/watch?v=9IvsMlcuZ1Y]

Now for the longer answer as you already have some experience I will be preaching to the choir on a good bit of this.

I would say the Nikon D40 Its an entry level DSLR. A digital SLR will give you a much larger sensor than any point and shoot camera. Larger sensor = more light to each pixel = clearer, crisper photo with better color saturation. DSLR will also let you grow and take more control as you learn more and you can change lenses when you have a need to. The sensor on the olympus is smaller than on Nikon or Canon

I am a nikon person and have had nikons since the 70's I personally think the nikon D40 give you more for the dollar than any DSLR today. There are some that do more but you pay a good bit more. Do not let the lower megapixels concern you if you do not do very very large prints you will never notice the lower DSLR. My brother recently needs a DSLR for a class and I recommended the D40 to him So I would also say get the D40 not the D40X. The Nikon D40 does not have limited functions compared with other entry DSLR. Yes it has fewer funtioncas than a 1500 dollar camera body would. It is not a a cut down version its equal or above most any entry level DSLR.

There is a great article in this months Digital Photopro Magazine that is titled "Megapixels how much is enough" EVERYONE looking at buying a new digital camera can profit by reading this article. Its here

http://www.digitalphotopro.com/studio/megapixels-how-much-is-enough.html

I have a d300 and a d40 and when I am shooting for fun I grab the d40. Its weightless, a joy to use and gives good results

If you have a bit more money the D60 give you a number of things you want. It has newer firmware and image processors, designed for the 10 mp sensor. It has an "Active Dust Reduction System with Airflow Control ". Nikon not putting a system on the D40 to deal with dust is one of the biggest drawbacks I see to the D40 ( though I think its still a great camera for the money) If you change lenses dust will get in and the camera needs a system to deal with it. With the D60 you get a VR lens. That will help with low light situations ( they may offer that now with the D40 but originally it was not) . The D60 has Adaptive Dynamic Range. Nikon calls it "Active D-Lighting," it lets you save some highlights that my otherwise be lost. It has a newer better metering system than the D40. So you can get the D40 not the D40 x and spend the other money on lenses or a flash

Some people will want to make a big issue out of the fact that there are some nikon lenses that will not autofocus on these cameras. Right now there are "only" about 39 lenses that autofocus on these cameras. They cover the range of focal lengths. I doubt any photographer would be seriously limited with "only" this many lenses to choose from. If you want to manually focus you can more than double this and do so at a low cost. Manual focusing is easy and how we did things for decades before the advent of autofocus.

Cannon and Nikon chose to put the vibration reduction in the lens rather than the body. Somefolks put it in the camera and make of that. Yes that means you get stabilization only on lenses with that feature built in. In the body in theory it would work on every lens. But in fact image stbilization in the lens has proved to work faster and smoother with a lower impact on focus times than image stabilization in the body/ One problem with in body stabilization comes from the fact that the sensor would have to move different amounts for different focal lengths. A canon white paper says an in body system would have to move the sensor 1/4 inch to account for movement on a 300 mm lens.

Now a comment on liveview. Have you ever tried to hold several pounds of digital camera and lens steady at arms length while you look at an LCD screen. It not at all the same as holding a few ounces of point and shoot camera steady in the same position. One of the things we preach to new photogrpahers is to learn to hold the camera properly so the body mechanics give you a steady shot. You can't really do that looking at the LCD. So liveview is really something that will have very limited applications in a DSLR. Usually only when its on a tripod. I have liveview on my D300 and have never used it.

Nikon also has great service. I was just reading the other day on eyefetch in the Nikon forum where someone posted that they had dropped thier lens and broken it. It was not a fault of the company they messed up. The sent it to Nikon and Nikon could not fix it. Nikon offered them a brand new identical lens at half the price. They did not have to

In closing all major camera manufactures make good cameras get out and compare the features and how they feel in your hand. Go to places like kenRockwell.com and DPreview.com to compare them. Nikon and Canon have the largest market share and I personally think there is a very good reason they do. Not bashing other brands but photographers tend to be very very demanding folks and they then tend to be loyal to what has worked for them well and consistently. That is not a pavlovian response anymore than it is a pavlovian response in my work at the fire department when I trust the brands of turnout gear and airpacks that have worked for me time and time again. Sometimes even going beyond the published specs. People in ANY demanding profession gain loyalty and trust from thier experiences. And if the product did not perform it would not be favored for long.

The one I want:

http://www.amazon.com/Canon-Digital-10-1MP-18-55mm-3-5-5-6/dp/B000I1ZWRC

You can never go wrong in buying the best thing you can afford.
Having said that, where to buy to a large extent, it depends on the photographic level you are at.
My definition of an amateur photographer is a photographer who has a good knowledge of photography and would like to take pictures for camera club type competitions etc., make large prints for viewing, do outstanding quality photography purely for pleasure of making pictures, but does not want to make a living using photography. If you fall into that category, treat yourself to something nice like the Canon EOS 40D or the Nikon equivalent (you're asking my opinion here, and I am a great Canon fan).
If you are more of a beginner in photography, you should probably choose the Canon Digital Rebel XT or the Nikon equivalent which are less expensive entry level DSLR cameras, and a good basic place to start.
Don't also by a large number of accessories to start with. Add the accessories you really need and want as you grow into them. Select your basic camera system first (Canon, Nikon, or whatever else you decide on). When you choose a camera system, and begin buying accessories for it, you will be "locked" into the system you have chosen because accessories are not interchangeable between camera systems.
I have helped to make an intelligent choice.

The digital camera I want is the Canon D20.
THe lens I have is EF 28-135mm f/3.5-5.6

http://www.usa.canon.com/consumer/controller?act=ModelDetailAct&fcategoryid=149&modelid=7337

Thanks!
I found a D40 used in great condition for $475, so that's why I'm considering the D20 over the D30.

Thanks
Oops..I meant a D20 (not a D40)

The 30D would be a very good choice.
All Canon EF lenses are compatible with Canon's Digital SLR cameras.
EF-S lenses are only compatible with their Digital SLR cameras, and not their 35mm film cameras.

Source: http://nikonimaging.com/global/products/digitalcamera/slr/d70s/pdf/D70s_16p.pdf

There is no way I can afford a DIGITAL SLR. I’m looking for a great high quality camera, probably 10 megapixels, with at least a 12x optical zoom..full control to be able to select aperture/shutter controls, and manual focus as well. A camera that has a GREAT lens
and preferably can handle high speed shots (or has continual mode)
and has good quality even if I am using a higher ISA setting. An excellent MACRO mode would be a nice plus.

I know I’m asking for a lot, but I’m sure Ive read pretty good reviews
for cameras like the Canon IS or something like that…..

What other Digital cameras are top of the line these days???

All of the major brands are good. Choose a brand that appeals to you. Then you have to think about getting a spare battery, what size memory card, if you want an extended warranty, how much you can afford, what size zoom, if you want manual controls, the size of the camera, finding a reliable place to purchase it, and the list goes on and on and on…….

The first thing to realize is that almost any digital camera will take good pictures. If more people would read the manual more than once, they would be able to take better pictures. Usually, the person assumes it is the camera when it could be them not knowing exactly what to do. Just give yourself more photographic knowledge by doing more reading on the internet.

I really believe buying a camera is an individual choice.
The person needs to read alot of reviews on cameras so they can decide on the features that they really want and need.
Go to the store and hold them so you can see if they feel comfortable in your hands. If possible, take some pictures in the store to check the quality of the pictures.
I can only give a suggestion of what to look for in a new digital camera.
Good Luck

my suggestion
go to this link for help

http://reviews.cnet.com/digital-camera-buying-guide/

The materials and reviews on SLRs contradict with each other. When some say only lenses matter, others say camera matters a lot. My budget is somewhere around 700$ and I'm not sure if I should go for the relatively cheap Rebel XTi or Nikon D80 (or any other camera for that matter). I'd get a better satisfaction if I get a latest model camera (just psychological) for all the money I'm paying but it's purely a choice.

And for those who claim the 'best suited camera is relative', let me give me a category-wise frequency :

Landscapes – Quite frequent
Portraits – Very frequent
Sports and movements – relatively less frequent
Night shots – A lot of them
Macro – Frequent
Studio mode – relatively less frequent

Please help me with the models and what'd suit me.

Cheers,
Yogaesh
Thank you all for your answers! Special thanks to fotoace for the specifications on the lenses. But I thought a little more insight would help you answer better.

1. I'm not a pro-photographer. I have a lot of interest in photography but there is still a long way to go. This translates to the fact that I can't be spending thousands of dollars at a stretch to get the utmost quality. It's an optimization of cost and quality that I'm looking for. My budget can at the best stretch to a 1000$

2. What is the difference b/w an 18-200mm/f 3.5-5.6 as opposed to separate lenses having their focal lengths/apertures falling within this range? The reason I'm asking is that I'm looking out for thanks giving deals and most of them come up with standard set of lenses as opposed to having a choice of lenses.

Thanks,
Yogaesh.

i have a rebel but bought a better model sometimes they have sales where they include a better lens, I have 2 extra lens a wide angle also bought a flash, the more you spend the more it does but most have the same starter lens and after using it you will find the limitations and want a better one it is worth getting and if you keep the same brand the lens can be used over and over so the money not down the drain so far cross my finger they not change it