I have one and I like it. Its a great entry level camera.
I don't know the XT (350D) too well, but I did some quick reading and it seems to allow you to shoot in raw. Not sure what you mean by it not having a raw setting.
Its not that much more of a professional camera than you XT. Its a step up, but not a huge leap. If you want to start venturing into a more advanced camera, you'd be looking at the 40D or 50D.
Main differences I see are the bigger LCD screen on the XSI, Live View, a somewhat faster continuous shooting speed and a higher pixel count. I think the XSI is also lighter.
Its a great camera, but again, not sure if it warrants an upgrade from an XT...or if you will notice a huge difference.
What do you not like about your XT or what do you hope to get with the XSI (other than RAW, which should be available in both)?