Sr.Cordeiro Offline Upload & Sell: Off
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I started my photography journey on four-thirds with a Olympus E500, sold it to get a Canon 40D, then sold it to get a 5D MkII and recently I returned to four-thirds (micro in this case) with a E-P1 to more casual work (I mantain the 5D MkII for serious work).
Based on this I can only recommend you the E-P1 over the 40D if you want to carry your camera every time to street photography, being unobtrusive is a must or if you want video (but for this last one I think the Panasonic GH1 would be better).
The 40D is a fantastic photographic tool, it has a better image quality at lower ISOs (usable at ISO 1600, the EP-1 at ISO 800 is usable but barely), it's very fast (in terms of operation, AF and FPS), it's a lot more versatile and has much better built quality.
Making it short (and a bit exagerated): the 40D is a more like a professional tool and the E-P1 it's.. well it's a tool too, but more on a gadget side (but a very high quality and fun gadget to use 
With all this said, bear in mind that either camera can give excellent photos in the right hands. It's a matter of personal approach to photography, some photographers can make outstanding photos with a smaller system that they could not do with a larger one because it's the most appropriate tool for their style and vice-versa.
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