I've always been a Canon person, so I recommend the Canon. From experience, Canons are easier to use, offer a greater lens selection and price, and general affordability without sacrificing quality.
For low to mid range DSLRs, Canon is far more experienced than Nikon and knows exactly what features capabilities and use the low-mid-range consumer market is looking for.
Shop around, there are XSis for around 600 WITH a low quality but quite usable 18-55mm kit lens.
However, the XSi is indeed going to be discontinued (Not that it matters much) but I still I strongly suggest you by a T2i. The XSi is a really good camera (I own an XS, the xsi's little brother) But T2i has 1080p film capability, so if you have family, it's the device to carry around. No need to lug around another camcorder. 18 megapixels will be more than you ever need and it takes Canon's entire line of lenses (EF and EF-S), as well as other big name third party lens suppliers like Sigma and Tamron, which offer generally a wider price range for canon mounts because they're so widespread. A DSLR is quite an investment and you don't want to invest in an XSi now, and eventually have to upgrade to a T2i or better because you love photography so much or going pro. If you care for your equipment, there is no reason why you shouldn't get a T2i now. (I'm assuming you have the money since you are willing to buy better lens separately)
Either will offer great picture quality than what you are used to, but take it from a Canon SLR/DSLR owner since the 80s, Canon won't disappoint and will last you a very very long time.
PS: I still have my lenses from the 80s, and they work great with DSLRs as well.
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Canon EOS 7D