Hi Jo
The new Canon 400D would be an excellent choice and is likely to be a very popular DSLR particularly with the 10.2 megapixels and the dust prevention additions. Buy the body only the kit lense is very poor and the £50 saved would be better spent towards a better quality lense.
On your budget you are going to be restricted on lenses with only £350 left after buying the 400D. A couple of good choices would be the Canon EF 100mm f2.8 USM Macro circa.£350 & EF 70-300mm f4-5.6 IS USM circa.£350. oops budget blown. Worth considering going for a 70-300mm to start with and add the macro when funds permit.
An alternative would be to go for the Sigma equivalent, shop around and you could get both for £400.
At the end of the day its all about quality of image and how critical you are of image quality, a budget entry level lense is not going to give the same performance as a pro. 'L' class lense.
Where funds permit go for the mid-range lenses to avoid dissapointment.
Have a look on this site at lenses they have a good range to ponder over
Warehouse Express Online
Have a look in the photography forum and you will find a lot of advice on lenses and the best deals around.
Gerry