One important thing to remember, image stabilisation only stops camera shake, not the motion of objects in front of it. If you do a hand-held telephoto shot at say 1/50th shutter speed with IS, the background will be stable but any movement (eg people) will be blurred.
The 40D is a good body but bear in mind that lenses are worth more (and will cost more for the good ones) in the long run.
