Welcome Alex
the D40 was my first dslr purchase and it has been perfect for 'learning the ropes'. If I had known back then (18 months ago) that I was going to get into photography as much as I have then I maybe would have gone for something a little more mid range from the outset (like a d80 back then or a D90 these days). But at the time I wanted to get something affordable which still produced nice images.
The three 'lows' I am starting to feel restricted by are
1) the lack of auto focus, which makes using the 50mm 1.8 more fiddly
2) poor iso performance for low light snaps and landscapes
3) the 6mp output also means that I cant crop as aggresively as I could with a 10 or 12mp camera.
But I love everything else about it....you really cant go wrong.
My advice would be that if you think you are going to get into photography in a big way then go for something like a d80 (which is a bargain at the moment) or even a d90 (for improved iso performance and dynamic range) as you are unlikely to grow out of it as quickly as the d40.
But if you are wanting to keep your investment to a minimum for the time being and see how things go then the d40 will be great.
I'm upgrading to a D90 in the next few weeks for the reasons listed above but i'm still chuffed with the results i've got out of the D40.
I bought the 50mm 1.8 last week and had a play with it today for the first time and it's certainly still usable without the autofocus.....you just have to take a bit more time with the shot.....