I just upgraded from a D40 I used for a year or less. I loved the D40- my first DSLR, and would reccomend it to anyone as an entry level camera into the Nikon line of products.
Having said that- the D90 feels like it is light years beyond the D40! The IQ, af, menu controls and on body controls are just So much better! Prices are coming down on these, so if you have a D40 and are wondering how big an improvement it is, and if it's worth upgrading to, the answers are- HUGE and YES!