350d has really good image quality in a dinky little plastic toy form factor. Canon also pisses me off that in exchange for their good sensors, the cheapest model that offers a damned spot meter is the 30d. Aside from that it's a solid camera and if you're stepping up from a p&s you probably would love it. You may also want to check out a Nikon D70, the image quality is nearly as good, it doesn't feel like you're holding a toy, and it has some more advanced picture-taking features. The prices on the D70 have come down a lot and now with the D80 coming out they should drop even more. Hell the D50 is probably worth a look also. Pentax has some good models out, the K100D has built-in image stabilization. The Sony (a.k.a. Minolta) A100 also does if you want to spend some more money.

I would only really stick to lookin at Canon, Nikon, Pentax, and Sony/Minolta. How much money you lookin to drop on the body, and how many lenses you think you'll pick up?