By no means am I doing a thorough 40D review, that's been done. I've been shooting with 1-series bodies since switching to Canon many years ago, but also carried a 10D for travel and family gatherings. The 10D was getting ready for semi-retirement and I replaced it with the 40D. There are times when the 1dmkII is just too much and the G7, which I always carry, is not enough. The 40D fits the bill perfectly and at the right time. The 20D gave me no reason to change from the quiet 10D, the 30D was no different from the 20D to my eyes, but the 40D is significant, and it's not solely because of the 10mp. If you look at mp only, you miss the bigger picture.
The AF performance, with 9 cross-type sensors, is spectacular for this price point and dare I say it "compares" well enough to the 1-series in AI-Servo to be a capable third back up. I've already done successful testing of indoor prep sports with great results. The speed of operation is excellent with nearly instant-on and it's always ready to shoot. Image review is fast and the 3" LCD, while not hi-res, is bright and readable and seems not to affect battery life which is still extraordinary. The fact that I can keep using the reliable BP511 batteries is a plus. Handling is excellent for my large hands, but the BG-E2 grip doesn't look as nice on the 40D as the BG-ED3 did on the 10D; the BG-ED3 on the 10D made it look like one solid camera while the BG-E2 on the 40D definitely looks "tacked on" although it fits nice and tight. A small nit pick.
Image quality is excellent and the high-iso, which is equal to the 20D/30D, gets better when using the in-camera noise reduction function. You pay a price with less buffer when using noise-reduction, but the chroma noise is gone and the detail retention is excellent at 1600 and 3200 iso. The 14-bit color makes for much larger RAW images (14mb) but does appear to provide smoother color transition if you know what to look for when doing post work in RAW. The in-camera JPGs appear softer than the converted RAW images unless you set the in-camera sharpening to 7 (the max). I like the in-camera JPGs at this sharpening setting.
Another great feature is HLT (highlight tone priority). If selected, the 40D processes the JPGs to keep highlights from being blown and yields a bit more in the shadows at the cost of iso100/3200 selection and more-but-barely-noticeable shadow noise; I love it. When it comes to exposure, it appears that the 40D exposes images a bit darker than did the 10D (and 20D/30D I hear), but that depends on what you shoot and what the backgrounds are like; I'd prefer a little less exposure than over-exposure, but the exposures for me are in line with my 1DmkII bodies shooting the same things.
Live View: I don't use it, but I suppose it is nice for macro work for focus checking if you really need critical focus and have trouble using the viewfinder when manually focusing.
If you shoot action, the 40D will make you very happy coming from the 10D and also the 20D and 30D which I have had plenty of opportunities to shoot in the past. If you don't shoot much action, then I see no reason to switch from a 20D/30D unless you want the live view or HLT or want better low light focusing. If you have a mkII and cannot justify another as a back up or want a lightweight alternative, the 40D will do a decent job. It is NOT as fast as a 1DmkII to acquire targets and hold them, but does a respectable job all around.