the order of importance for getting good shots is as follows:
1) Photographer - it don't matter what kit you have if you can't use it you can't use it. Of course you improve and learn all the time so you can work on this aspect
2) Lens - the lens controls and directly affects the light which you have to work with to get a shot. Good glass will give you a bigger improvement in image quality than a better body will - unless you start comparing XTi to 1D line cameras - and even then poor glass will still give you poor results
3) The camera body - bottom of the list is the recording device. Also its here because unlike good quality glass a camera body quickly falls behind and becomes obolete technology much faster - a lens can last decades before you have ot think about replacing it - a body lasts perhapse a year or two before it falls way behind.
My advise is firstly to work out what you want the kit to do - product photography and family work. Well most bodies will work for both and work well. Many people start with cameras like the Rebel series - however I know many people have moved (in canon at least) to the 40D as a main camera and are very happy with the upgrade from rebel series. If you have the money I would say if your serieous the 40D is a good investment.
Next up your going to need some glass - I agree that a lens like the 100mm macro from canon would be a good choice for product photography, but I know little about it indepth so might wait and see if any who do that sort of work have any comments. The advantage of working witha macro is that you can get in close to the product if you wish.
Then your going to need a setup for lighting - product work will be basically studio based shots inside with controled conditions so understanding and controling lighting will be important. Myself I don't do this line of photography either so its another grey area for me - but suffice to say research and budget for a lighting setup. Google "Strobist" its a blog which is very popular and contains a lot of lighting advice
Then your probably going to benefit from a good solid tripod to hold the camera steady - that will improve sharpness in shots a lot since you won't have camera shake.
welcome to photography - please hand over you wallet
