Recently I bought a Nikon D50, a real gem of a camera, for $400.00 refurbished at
Adorama. It's a great little camera, and I just ordered my 50mm 1.8 lens!
I played with the D40, and even the Pentax and Canons in the 500-600 dollar price range and I wasn't happy with them. The d50 felt a bit more solid, and (compared to the D40) I liked having the TOP LCD to look for basic exposure information, rather than always referring to the screen that my nose rests against (and surely gets oily) when I am taking a picture.
The D50 has been discontinued, but will be supported for a lifetime from what I can tell. It can use the older lenses, such as the 50mm I spoke of above, because it has it's OWN internal focusing motor rather than limiting you to the special digital lens (read:expensive) that the D40 makes you use.
HOWEVER, all that said, I would HONESTLY recommend a Canon Powershot A-series. Everyone on this board is tired of me saying so, but EVERY shot with the exception of the first 5 on my site (
www.flickr.com/photos/rmthompson) was taken with a Canon A610 5mp camera. I'm not saying I am some amazing photog, but I think the shots are decent, and I got paid to take several of them.
The Canon A610 (the A630 is it's big brother) is a little older, but has a complete manual mode (not focus) so I can have complete control over my photos. In fact I credit it (and this board) for teaching me aperature, and learning the effect f-stops and shutter speed has on my picture taking it. I would be hard pressed to have learned my D50 without learning that little point and shoot first.
The simple fact is that ANY DSLR might be too much for what you need. There is a myth that they take better pictures, but the truth is they just allow you access to special lenses, and manual focus, that you cant get on a point and shoot style camera.
Well I've rambled on (and used too many parentheses), but I know what you're feeling, I've recently made a tough decision yourself.... but remember no matter WHAT camera you choose (seriously) you can take decent pictures with it, and more importantly, the people on this board will show you how.