I did that exact upgrade too, and I agree 100% with these comments.I did that exact upgrade. I haven't seen a big increase in image quality but in terms of handling and fps the 40D is a world apart. My old 350D feels like a little toy camera in comparison.
Also I find the menu system and button placements on the 40D to be far superior making the camera much easier to use.
I agree with this too.The lens plays a much bigger role in determining IQ than the body ... don't expect any real improvements in IQ if you're using the same lens(es).