Difference between Canon XSI and XTI?

the xsi is a little bit better in every way but just a little so if you have the cash go for it

the xsi takes a lot of the features the 40d has and put it into the rebel series.
the main difference between the xti and xsi is as follows:
-First of all about $300 difference. a XTi kit can be found for under $600, while the XSi kit is about $900
-12mpx over 10mpx(you wont be able to tell, although there is less noise at higher ISOs witht he xsi)
- the XSi uses SD rather than the more popular and less expensive CF.
-LiveView, although this is rather useless
-3" LCD over the 2.5", same resolution though
-DIGIC III processor - can handle 14bit and i believe slightly faster AF
-The XSi kit lens had IS (image stablilzer) although many people criticize kit lens as bieng low in quality what do you expect out of $200-300 lens.

If you are in the market for the XSi i would pay a little more and get a 40D that can be bought 1,130 with canon insant rebates special going on right now

I went with the XTi route last month and take that money and invest into a better lens although I'm probably going to pick up a 40D sometime this week hopefully.

^Pretty much spot on.

- the 450D also has a higher max iso I think 3200 isntead of 1600
-the live view system used in the 450D is apparently quite slow compared to the system that nikon has gone with, so it is only useful for certain applications, not like a digital compact.
- not all the kit lenses are IS, at least they aren't here in nz. we have kits bundled with the non-IS lenses from the 400D.

There are also other changes such as a larger view finder etc.

I just bought a 400D two days ago, I got it at a super good price with the standard 18-55mm lens, saved over $1000 on what I was going to pay for the 450D. I decided that I would be better off buying a better lens than the kit lens and some other accessories rather than having the latest model.

Check out:
http://www.dpreview.com/reviews/canoneos450d/
http://www.dpreview.com/reviews/canoneos400d/
for a pretty comprehensive review of the two cameras, and then make the call as to whether you will benefit from the new features or if you would be better saving some $$. Also go into a shop and see what the cameras are like to hold, the 400D is slightly smaller and has a different grip to the new 450D. Some people with larger hands have found the grip on the 400D to be a bit too small for comfort.