Apparently Nikon likes to introduce products only days before Christmas. Last year it was the D200, this year it's the D40.
The D40 is a smaller, lighter, somewhat reconfigured D50 (for the specification comparison, click here). The reconfiguring has already caused some whining on the net (only AF-S lenses focus, the rear color LCD is used in place of the now gone top LCD, and we've got another new battery [why?]). On the positive side, the image quality seems improved over the already quite good D50, we get a FUNC button, the flash is a little more powerful, plus we get the D80 menu system, including the RETOUCH menu.
The D40 only sells as a kit with a revised (faster motor) 18-55mm AF-S lens for US$599 and will be available in December. Also introduced was the SB-400, a simple and less expensive i-TTL flash (sorry, no remote abilities).