When I was researching my dslr purchase last year, I was told by people not to bother wit the low-end cameras, and to spend a bit more on a better body. In the end I couldn’t justify the higher price of the other bodies here in Australia being a uni student so I opted to get the lowest model in the Canon range, the 1000D (or Rebel XS in North America).
Obviously there are sacrifices you make when you use the most basic model. Noise at high ISO levels, limited ISO range, smaller number of AF points, reduced metering modes, lower shooting fps, reduced megapixel count, and general construction and feel of the camera. The 1000D suffers from all of these. However, these missing features do not make this a bad camera. Once you get a good lens on this camera, it really springs to life. Picking up a Canon 50mm f/1.8 lens is one of the best things you could ever do. This lens is very cheap, has a low f-stop of 1.8 which makes it brilliant for low-light situations, it is a sharp lens at max aperture and only gets better as you stop it up.
With this lens the 1000D can work well in low light situations allowing you to use a lower ISO thus reducing noise. It can take as sharp a photo as many of the higher models when paired with this lens and it gives you a lot of creating control with depth of field.
When I picked up this lens I was amazed at how good this camera really could be. Recently I was again concidering upgrading to the Canon 550D or the new 60D but instead opted to get a high quality Canon L-lens. It’s like having a new camera. There are people who would say sticking an L-lens on a 1000D would be a waste of time, but it truly isn’t. The truth is pretty much all dslr bodies these days have good image quality so it’s the lens and the idiot (like myself :P) behind the camera that makes the most difference.