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I have the Canon Rebel XT. Its a pretty good entry level dSLR. Compared to the Nikon D50, it has more/better features. Not too sure what features you're looking for, so I won't go into details. The older Canon Rebel is the equivalent of the Nikon D50, which should be priced equal to or less than the Nikon D50. Image quality wise, the body doesn't really matter that much, its the lens that will make or break the image, so if I were you, I would just get the body which you can afford and use that money towards a better lens. Check www.bhphotovideo.com. They should have decent prices for both the Nikon D50 and the Canon Rebel, around the $500 range.
Regarding lenses, the stock kit lens will do fine for awhile. Its a cheap alternative wide angle lens, since its valued around $100 or less. You can't get any other wide angle lenses within that price range. Here's a sample picture:
Its all in the post processing you do to the picture. With dSLRs, you definitely need to post process your pictures in photoshop, since the dSLR doesn't do any in-camera processing for you, compared to P&S cameras.
Another thing you can buy if you ever do end up getting either a Nikon or Canon dSLR, is a 50mm 1.8 lens. Both companies have this kind of lens, and for the price($70-$100), gives you pretty sharp pictures. Here are some samples:
Hope that helps. 
Edit: Forgot to say, do try them out at a store first, see how it feels in your hand, then buy somewhere online where its cheaper. The ergonomics of the camera can be a factor in your picture taking, so see which is more comfy. A lot of people complain that the Rebel XT is too small for them since they have big hands. I have pretty small hands so the Rebel XT fits me. The Nikon D50 and the older Rebel should be a tad larger to hold.
SonicYan aka Mikey
1997 Eclipse RS
Pinoy Reppin' SoCal 2GNT
Best: 16.35 @ 83.05 MPH
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