Making a camera choice can be such a tough decision, because for most of us, it is a big purchase. You have some great advice already, but here is my two cents.
I have a Nikon D50 (which are discontinued - about equivalent to a D40, but a has the autofocus motor and a few other extra features). I have used this camera for two years and just now feel like I am starting to outgrow it and actually understand why I am outgrowing it.
Someone mentioned camera weight. One of the reasons I am hesitant to upgrade is because most upgrades would be a heavier camera. A few ounces might not seem like much, but it makes a big difference if you have your camera around your neck while you walk around the zoo, museum, etc. With my camera and a decent lens on, my neck is sore after a couple of hours.
There was also talk about megapixels and enlargements. My camera is only 6MP and I have been thinking that might be one of the reasons I want to upgrade. But, I was recently reading somewhere about how with more megapixels comes need for more storage space. If I upgrade to a 12 MP camera, each picture will take up twice as much room and my hard drives will fill up quickly. Something for me to consider, since I take A LOT of pictures!
You could use a higher megapixel camera at a lower resolution setting, but that kind of negates the extra money spent on a higher MP camera.
Another one of my favorite purchases is my external flash. I bought a SB-400 flash for about $120 and it is one of my best purchases. It is still pretty small and light, but it throws a lot more light than the on camera flash and has the ability to 'bounce', getting rid of nasty shadowing.
So, here is my two cents, for what it's worth. If I had $1200 to spend (the cost of a D90 with a kit lens) I would seriously consider buying a 'lessor' camera (D40, D60 or maybe D5000) and spend my extra money on a good lens (or two) and the extra flash instead.
Just keep in mind with the D40 and D60, not all lenses will autofocus. Sometimes this makes the lens cost more than it would be for a different camera.
Hope this is helpful! I totally know how overwhelming these decisions can be. In two years, one of the main things I have learned is that money spent on good lenses is good money spent. They will be with you for a long time, vs a camera body that may be 3-5 years.