That is a tough one...the 400D is a lower level body but has newer technology. The biggest difference (besides price) is the ergonomics and user interface. For many people, the 400D (and the Rebel series) are just too small and hard to control. Personally, I bypassed the 350D for the 20D because the feel and layout of the 20D was a much better fit for me.
I suggest you go to a store where you can feel both cameras. It may become clear which one feels best to you.
Still, the price difference is rather large and difference in the image quality is most likely negligible. I say that if you used the price difference to buy a better quality lens...then the image quality would be better than the 30D with the cheap lens.