http://www.kenrockwell.com/nikon/d40.htm
Granted some people don't like him, but hes not the only person I've heard this from. While it was on some random German site the site has since gone down due to digg.com (I assume from the high amounts of interest that digg.com generates). Well check it out for your self, he posted a lot of info so yeah.
I know some people don't like Ken, but he is still a really valuable resource re all things Nikon, and for the most part, he is direct and speaks from the vantage point of a real world photographer without getting all wrapped up in hype and pixel peeping. I am sure other opinions vary.
As for the D40, I am not seeing any significant reason to upgrade from the D50, and some reasons not to. Mind you this opinion is based on a third hand readings of "leaked" camera data - so may not be worth anything.
Still 6 MP - but that isn't that much of an issue to most people unless you crop your photos a LOT - like I do. But what's this about only accepting AFS lenses? I hope this is incorrect or I am reading it wrong. This would eliminate all 3rd party lenses (bye bye Tamron 90 macro) and a lot of relatively modern and fine Nikon lenses such as the 80-200 F2.8. Yikes!
No word on Commander Mode being included - which was, IMO, the only significant feature missing from the D50.
If this info is all true - and it may not be, I would really only see the D40 as aimed at the market segment who would otherwise have bought a point and shoot or a prosumer. I would stick with the D50 from what I see - but the future may have other surprises in store.
Interesting... sounds like an even more scaled down version of the D50 - you lose the LCD and a few other features (although the resulting camera is smaller and lighter).
I'd definitely like to check out the final specs when they come out...