D40 and D40x get all the plaudits these days in terms of 'budget DSLRs' and seem to win every 'starter DSLR' group test, but to be honest I really wonder if they will actually be cheap cameras to own in the long run. The lack of an Auto-Focus motor is a pain in the arse, whilst Nikon/Sigma etc are gradually converting many lens to AF-S, there are still a lot of fantastic lenses that would be manual focus only.
A good second hand D50 would be the better option imo if you decide to go down the Nikon route, probably best to try London Camera Exchange or at least somewhere you can get a good look at it first and that would clean the sensor for you initially.
As for lens, the Nikon 18-200 VR is untouchable as an all-round lens and has been credited (among other things) with finally pushing Nikon ahead of Canon in terms of DSLR sales, it really is a brilliant lens. That's about £500 though, but if you don't mind changing lens now and again the kit lens supplied with your camera, a 50mm 1.8 (£80) and a Sigma 70-300mm f4-5.6 (£100) would be a fantastic little collection. The 50mm alone is basically pro-quality glass, for things like static car shots you won't get a sharper picture for more than three times what it costs. As mentioned previously though, if you want these lens to auto-focus you will need a D50, equivalent auto-focus versions compatible with the D40 cost a fair bit more.
Can't go wrong with a Canon 400D either, about £100 more than a D40 though so you need to weigh up what lens you might want and how that fits your budget.