As you can tell from some of the other threads I am also doing some research on Canon DLR's.
From what people are saying and from the latest test dpreview on the 400D
http://www.dpreview.com/reviews/canoneos400d/
there is not much of a difference photographically between the 350 and 400. However the 400D has some nice new functionalities inc. sensor cleaning.
The question you may like to consider is wether you should go with a Huteck or equivelant modified camera and lower megapixels so save money. So I would say that a 300 or 350 modified unit will out perform the unmodified 400D. That's the stage I am at the moment. Altough it would be nice to get a modified 400D, it's a lot of cash. So for me either a modified 350D or just a second hand 350D body to start off with could be the best value for money all around.