I would say the 400d due to the improved AF point arrangement and the larger more delicious looking LCD screen. It has other gimmicks like sensor cleaning that don't really matter. 400d also has more noise at higher ISOs than the 350d but I would pick the 400d solely because of the smarter AF point arrangement.
That said, if you're just starting out, the 350d is ok since you're unlikely to appreciate the most useful upgrade the 400d has over it's predecessor. You'll probably be complaining about the increased noise at higher ISOs. You may like it because of the larger lcd though.
"There is no spoon. It is not the spoon that bends. It is only yourself."
All cameras are good so long as you know how to make the most out of it. Better to focus on what you want to shoot, and work out whether budget and all the other things you should be considering are a factor at all; then shoot. Bodies can always be changed, and they shall. If you've decided on Canon for sure, then it doesn't really matter, does it? Lenses will cost more than your body in the long run. Choosing the system is more important than choosing the body.
The other thing about it is that i initially thought the 10MP would make it worth the money since more pricy bodies like 20D 30D are only 8MP.
However, a comparison test on dpreview shows that same shot taken, viewed at 100%, the 400D image seem rather poor and not as sharp. If it cant perform like the 8MP sensor then no point getting 10MP right? i am not sure about how 350D would compare to 400D but from what i know 350D and 20D share same sensor..
Guys, I have bought Canon DSLR 400D as my first camera..
I bought it at the price of SG$1,365 with EF-S 18-55mm including EF Lens Work III, 2GB scandisk card, 20pcs DVD-R, Canon camera bag, additional battery, Emolux UV filter, Camera LCD screen protector..