I've got the TZ6 - same lens/zoom system as it's bigger bro. just not geared up for HD Video (which wasn't a problem for me). The zoom is pretty much 28mm-300mm in 35mm film terms - or something like a 18-190 (if such a beast existed) on your Canon 40D. It's a good all-round walkabout coverage - if anything i'd prefer it to go a bit wider, but then i'm a bit of a landscape nut and like W-i-i-i-i-d-e angles. The IS that's built in is pretty reasonable - though remember you're looking at a Screen on the back of the camera rather than through a viewfinder with the camera pressed against you for stability, so it can still be a bit wavery. It's not too deep when switched off - the lens retracts most of the way, and it's only a couple of mm deeper than the Ixus3 it replaced - it'll still fit in a shirt pocket for example. Only thing I miss to be honest is a proper optical viewfinder and a raw shooting mode to fit with my normal workflow.
All things considered i'm well happy with it, and would definitely put it on the recommended list.