I'm having the same debate, and even though I will more than likely buy online, I've been trying some of the cameras out at local stores. They both are competant in my hands, but the Nikon products seem "stronger" and more "professional", while the Canon (Rebel series) seems more user friendly, more like someone taking a step up from a Point and shoot, which is what I am doing anyway.
Canon also has some features such as in camera post procession, color things, that really no one that uses Photoshop, or even Picasa 2, would ever use, but it's there.
Personally, I like the D70s, and it's probably the way I will be going. The D70s has a few more options than the D50, and the s supposedly has the better imaging like the D50 does. I like the D40's larger screen, and I doubt I would ever buy a used lens, but I don't like spending the same amount for the SAME product. The D40 also has one less screen than the D50 or Canon, it's missing the LCD on top, but people that use it tell me it's almost BETTER because they can get those graphics on the main screen now, instead of flipping back and forth. I'm of two minds on it.
Here are some numbers:
D70s body for only $465.00
http://www.stop4camera.com/Shop/Product.asp?sku=d70sb
D40 body for only $384.00
http://www.preferredphoto.com/product.asp?id=nkd40
D50 body for only $425.00
http://www.stop4camera.com/Shop/Product.asp?sku=d50
The prices are so close, I don't know what to do.