Im not sure whether to opt for an D40 or a D60. What are the main differences between them?

As for carrying a bag around, when Im travelling I always have a bag with my iPod, book etc... in so size isnt an issue.

If you have money for a D60, then a better choice would be to get a D80.  Much more camera for your money.  D60 is more expensive as its a newer model and the improvements are not noticable for the price increase.  

I would go and get a D40 and have a little space for an additional lens.  The moment you buy a DSLR you quickly land up wanting to buy some lens.  

Either go D40 and get a 70-200 VR AF-S blah blah (can get the lens for about £120) and a D40 for £220 (give or take £5).

Or, go D80.

Main reason to go for a D80 would be that it has a motor inside the camera to drive any lens that are attached.  The D40/x/D60 you have to rely on lens with motors inside (this is not as big an issue as many point out).   Every lens on my want list actually has a motor in it already.  The only one that I have to manually focus with is a 50mm prime, although its not actually to much of a problem.  You can always get a 30mm prime.  Like with anything, there are pros and cons.  

I love my D40 and to be honest, will keep me going for many years.  As budget is tight, I much prefer to spend more on the lens than the camera, as if you upgrade you will keep you lens where the camera becomes void.

 

Im guessing he means the 55-200

http://www.bristolcameras.co.uk/p-nikon-55-200mm-vr-lens.htm

havent seen it as cheap as £120, but Im not ruling anything out (I dont tend to watch Nikon lens prices that closely).

N and C have started producing their cheapo lenses with stabilisation in the last few months to try and counter Sony and Pentaxs in body shake reduction. For me it doesnt quite cut the mustard, I like having SR capability with my 30 year old Carl Zeiss 35mm

The Nikons are superior lenses by far, but if youre on a tight budget then the sigma isnt as bad as its meagre price-tag would suggest!

Ill qualify that - Sigma lenses are actually on a par with Nikon.  The reason theyre cheaper is because their quality control is less stringent.

Oh and dont fall for that megapixels crap - most of it is marketing hype.  Most mid-range and budget cameras take an image then upsample (enlarge) it by multiplying the pixels manyfold.  You may think youre getting 10MP but in fact youre only getting 2.5 (x4).
   

Oh and dont fall for that megapixels crap - most of it is marketing hype.  Most mid-range and budget cameras take an image then upsample (enlarge) it by multiplying the pixels manyfold.  You may think youre getting 10MP but in fact youre only getting 2.5 (x4).
   

I agree with the first part, but no camera made by a reputable brand has ever upsampled in that way. The cheap and crappy ones used to, but even they seem to have stopped doing it for the most part.

The reason why 10mp in a compact is no better than 6 is because the lenses cant provide the resolution. In an SLR the lenses are better quality and the sensor is larger, so 10MP and even more is well worth it (although not necessarily a killer feature). I have 2 or 3 pro class lenses which easily out resolve the 10MP sensor in my K10D for example.