Differences compared to the D40
10 megapixel sensor
Lower base sensitivity (ISO 100 vs ISO 200)
Auto ISO option includes ISO 200
Faster continuous shooting (3 fps vs. 2.5 fps)*
* Slower with noise reduction enabled
If you are not shooting for a living, and intend to expand your interest in photography, you may want to consider a 2nd-hand D50 or D80. Or if you are the type who likes to tweak around in PhotoShop, then a D70 will work fine, cheaper too.