ISO performance, noise, video, blah blah blah... bodies are computers. They get better and better every year due to Moore's Law. Nikon and Canon are the same as Nvidia and ATI, one-upping each other all the time. Neither will stay the winner very long when it comes to bodies. Don't be foolish and make your whole decision based on who happens to have the upper hand at the moment for the bodies at your price level.
Glass is another matter. Canon and Nikon are pretty evenly matched here. In general, Canon has more choices and better prices, while Nikon has better quality at greater expense. For example, look at the basic threesome of professional f/2.8 zooms: wide-angle, normal, and telephoto. I think most people would agree that Nikon wins the image quality battle on all 3 fronts: the Nikon 14-24 is amazing and the much more limited Canon 16-35 can't compare; the 24-70 from Nikon is better than the Canon 24-70; and the 70-200 VR is better than the 70-200 IS (although I have yet to see good comparisons with the new Canon 70-200 IS II). However, Canon offers a lower-level set of zooms in the same ranges at f/4, each of which is considerably cheaper than the f/2.8 versions: the 17-40, 24-105, and 70-200. So there it is in a nutshell. Nikon lenses provide better quality, but Canon gives you double the options (and at lower price points). Part of this is because Nikon updates its lenses quite often. Canon will rarely update a lens more than once every 5 years, and there are many current Canon lenses that have not seen updates in 15 years or longer. Nikon, on the other hand, will update a lens whenever it thinks it can use the update.
If I were in your shoes, I would go with a used, older body and some better glass. Personally, I cannot recommend anything in Canon's Rebel line unless you really want video at the lowest price possible. The build quality and the ergonomics are just not there. Go for something in the XXD line. Similarly, I would not recommend the Nikon DX000 line, nor the D40/D60/etc. D70 and up are fine, but ideally you'd be looking at a D200 or D300. I recommend you shop used, previous generation, and higher model line.
Glass is another matter. Canon and Nikon are pretty evenly matched here. In general, Canon has more choices and better prices, while Nikon has better quality at greater expense. For example, look at the basic threesome of professional f/2.8 zooms: wide-angle, normal, and telephoto. I think most people would agree that Nikon wins the image quality battle on all 3 fronts: the Nikon 14-24 is amazing and the much more limited Canon 16-35 can't compare; the 24-70 from Nikon is better than the Canon 24-70; and the 70-200 VR is better than the 70-200 IS (although I have yet to see good comparisons with the new Canon 70-200 IS II). However, Canon offers a lower-level set of zooms in the same ranges at f/4, each of which is considerably cheaper than the f/2.8 versions: the 17-40, 24-105, and 70-200. So there it is in a nutshell. Nikon lenses provide better quality, but Canon gives you double the options (and at lower price points). Part of this is because Nikon updates its lenses quite often. Canon will rarely update a lens more than once every 5 years, and there are many current Canon lenses that have not seen updates in 15 years or longer. Nikon, on the other hand, will update a lens whenever it thinks it can use the update.
If I were in your shoes, I would go with a used, older body and some better glass. Personally, I cannot recommend anything in Canon's Rebel line unless you really want video at the lowest price possible. The build quality and the ergonomics are just not there. Go for something in the XXD line. Similarly, I would not recommend the Nikon DX000 line, nor the D40/D60/etc. D70 and up are fine, but ideally you'd be looking at a D200 or D300. I recommend you shop used, previous generation, and higher model line.