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Hello,
I'm thinking of getting into photography as a hobby..and was wondering if anyone has any good recs for a "beginning photographer" camera. Thanks 
Re: Camera recs
The best thing to do as a start is ask around like you are, and go look at some at the store. Canon and Nikon I know both make great cameras, there are some technical differences between them that once you get more experience with them can make a difference, but as a beginner you need to go play with them and see which one feels better to you, the menus are easier for you to follow etc.
Personally I would suggest you save up just a little bit more and look for something without the lens limitations of the D40, if you like the nikon maybe the D90, you can also consider the canon XSi or T1i (I am a canon shooter myself, I started with the XT which was a couple years back from the XSi and have since upgraded but it was a great camera to start with). So the limits on the D40, most cameras build the autofocus motor into the camera body, the Nikon D40 does not have this in the body (this was also true for the D60 and I think the new D5000, don't quote me on that) so every time you have to buy a lens you have to pay for it in the lens. High quality lenses are always expensive but you can usually upgrade them from body to body, here though you would be paying more for something (the auto-focus motor) that you wouldn't need if you decide to upgrade to a better body.
I would also look at
http://www.dpreview.com/
for camera reviews
http://www.flickr.com/cameras/
the camera finder on flickr to see what kind of shots you can get from a body (though keep in mind the lens and of course the photographer play into that a LOT, probably more than the body).
Oh and be prepared for a possibly expensive hobby, I started out with spending just $800 on a camera, I have spent more 10x times that since then on more lenses, a flash, memory cards, software, upgraded computer, even more lenses, a new camera body, tripod etc.
I agree with everything Michele said. The one thing I will note though, is that most lenses a beginner would use would likely have an autofocus motor in the lens. The D40 kit lens (18-55mm) has it, and so does the 55-200mm that's probably the second most popular lens. The also popular 50mm (f/1.8) you would have to manual focus though -- which, on that lens, is actually pretty easy. (Then again, there's a similarly priced 35mm f/1.8 that is AF-S and will autofocus on the D40).
Also, you're right that the D5000 also doesn't have the autofocus in the body.
All that said, I have a D40 and would love love love to upgrade to a D90...so I totally agree, but for some folks it is a matter of cost.
I also recommend kenrockwell.com for reviews and user guides.
My Blog
love my canon powershot sx200is
it has a lot of features and settings you can change as you learn more, but it also has auto settings. large zoom too