[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.

I also like the Cannons for the ultra high end price range.

For used glass, I would suggest KEH.Com — they have a great reputation and their condition ratings on the used glass tend to be fairly conservative.

For new glass, I am a fan of B&H photo although Adorama has also treated me very well. BuyDig also has a following.

I would also be certain you understand what lens you are buying. There is a big difference between a 70-200 f4 and a 70-200 f2.8. Not that one is always a better choice but, in practice, they are pretty different in weight and price (and, of course, one is a full stop faster). Brands other than Canon (i.e., Tokina, Tamron, etc.) might offer a good value — and might not — it all depends on the model in question. Be certain you understand the differences between a USA and a grey market lens — while the lenses are the same the warranties are not. Not the buying grey market is a bad thing, just that you should understand the limitations.

Some cameras have in camera image stabilization, others have high ISOs. But in the end if the menus discourage you from using it your not going to grab it that often.